THE WA Government has been accused of acting too hastily when it decided to offer $10 million of public money to a group of Capel dairy farmers who plan to establish a processing plant.
The farmers’ Challenge Co-operative beat competition from several other local and international processors to win the funding.
But Peters & Brownes managing director Graeme Laitt criticised the deal which beat a proposal from Kiwi Co-operative Dairies, a big stakeholder in his company.
“We did not think the Government gave the industry sufficient time to debate it,” Mr Laitt said.
“The review was not conducted critically enough, it seems to have been hurried through.”
Backers of the project disagree, highlighting the expected multi-million dollar outlay to build new facilities once the Challenge project is up and running.
Challenge Coop chairman Larry Brennen is confident the volume, capital and expertise needed for the ambitious project will be mustered.
“The domestic market is collapsing,” Mr Brennen said.
Deregulation since July has cut prices for many farmers.
“The export market is as strong as it has ever been, that helps make our business plan and strategy work.”
“We have gone through some really rigorous financial planning.”
WA Farmers Federation dairy section president Danny Harris said the State’s dairy farmers were in a precarious position and the Challenge project was a timely option.
“The first thing to do is secure the manufacturing future of our industry,” Mr Harris said.
He denies the deal is simply handing over the State’s money for a bunch of redundant assets – two plants owned by national groups exiting milk-processing business in WA.
“People who want to be knockers will use that line.”
“I ask them how do you start a new business without a factory?”
“How do you secure $20-$30 million without the volume? The humblest of businesses usually start with something.”
