Wednesday, 31 January 2024 07:55

ODH collapse 'not a surprise'

Written by  Sudesh Kissun
Organics sector leader Brendan Hoare says Organic Dairy Hub lacked the scale to compete in the global market. Organics sector leader Brendan Hoare says Organic Dairy Hub lacked the scale to compete in the global market.

An organic sector leader believes that failed farmer-owned co-operative Organic Dairy Hub (ODH) lacked the scale to compete in the global market.

Brendan Hoare, whose company Buy Pure NZ takes NZ organic products to the world, says he wasn't surprised at the collapse of ODH. Hoare also served as head of Organics Aotearoa, the national body of the organic sector.

Hoare says scale of operation is critical to success in the organics sector because of the benefits that go with it.

Smaller organic companies find it hard to compete with growing e-channel sales and online trade.

"Unless you are a boutique operation, small organic companies are finding it hard to remain viable," he told Rural News.

"ODH got caught in the middle; they were too small to be a boutique and not big enough to compete with the big players."

Despite ODH's collapse, Hoare believes organics remains a viable business for NZ firms.

While the growth in organics has slowed - from double digits in some cases to 2-4% per annum - Hoare points out that there's still growth.

ODH, touted as New Zealand's only 100% farmer-owned organic milk producer, was placed into voluntary liquidation last month. ODH collected milk daily from its farmer base, stretching from Northland to Wairarapa.

About 20% of that milk was turned into milk powders and nutritional products, processed at Waikato Innovation Park in Ruakura and generally exported to Australia and Asia, with some New Zealand customers as well.

It also produced Our's Truly brand liquid and UHT milk, cheese and milk powder using third party processors. The products were sold locally and exported.

According to the Companies Office, ODH directors, made up of farmers and independents, called in the liquidators, KPMG's Leon Bowker and Luke Norman, on December 1 last year.

In their first report, the liquidators say the company is being wound up after ceasing trading.

"After paying any remaining creditors, remaining funds will be distributed to shareholders. This is a solvent liquidation and will remain solvent for the period of liquidation."

ODH was formed by 37 organic dairy farmers, with a third based in Waikato.

On December 1 last year, ODH directors Michael Allen Brown, Cameron Farrand, Sharleen Gardner, John Wafer, Frank Goodin and Ian Cumming voted to liquidate the company.

A "statement of affairs", filed by the directors, shows that on November 24 last year, ODH had $50,000 in the bank. It had assets of $145,200, including cash at bank, $31,000 worth of stock, $54,000 in receivables and plant and equipment valued at $10,000.

Its only liability was $439 owed unsecured creditors, leaving the company with net assets worth $144,800.

The directors expect liquidator's costs to reach $20,000 plus another $35,000 for legal and consultancy.

ODH farmer suppliers have been recruited by Fonterra, which has a small organics business. This season, Fonterra hopes to process over 100 million litres of organic milk.

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