Dairy Farmers Left Reeling as Milk Transport Giant Goes Bust

A milk transport company has gone into liquidation, leaving roughly 27 South African dairy farmers with a slim chance of reclaiming any of the R90 million they are owed.

(The Post News)- The South African dairy industry is facing a crisis as Desmanda Milk and its partner company, Dezmo Trans, wind up their affairs, leaving 28 dairy farmers owed over R90 million with little hope of recovery.

This liquidation, believed to be the largest in the country’s agricultural history, has sent shockwaves through the industry.

Desmanda Milk and Dezmo Trans, once valued at R1.065 billion, are too indebted to be saved, despite efforts to rescue them from bankruptcy.

The companies’ financial troubles have left farmers in the Eastern Cape, KwaZulu-Natal, and the Free State exposed, with some facing losses of up to R14 million.

The Milk Producers’ Association is calling for a forensic audit to determine what led to the downfall of the once-profitable companies.

CEO Fanie Ferreira expressed concern over the liquidation, stating that only secured creditors are likely to recover some losses.

The association is also putting plans in place to cushion farmers from future losses, including a risk fund to mitigate against similar incidents.

The liquidation has also raised questions about the financial health of the dairy industry, with some farmers facing heavy risks due to non-payment.

The situation is “terrible”, according to Ferreira, with the country unable to afford to lose more farmers.

The industry is small but vital, with only 850 commercial dairy farmers supplying over nine million litres of milk daily.

Hannes Müller, a director at Tshwane Trust, has been appointed to oversee the liquidation of Desmanda Milk and Dezmo Trans.

He has been asked by major creditors to help gather information for a forensic audit but notes that the process is still in its early stages and much work needs to be done before a thorough investigation can be conducted.

If a company goes bankrupt and is unable to pay its debts, the Companies Act (Section 417) permits a confidential investigation into the company’s financial transactions, dealings, and assets.

Hannes Müller, who joined the process after the provisional liquidation orders were granted, is still in the process of determining the company’s assets and liabilities.

As the liquidation process continues, the fate of Desmanda Milk and Dezmo Trans’s employees remains unknown.

The coal trucks have already been repossessed, and some milk tankers have been put up for sale.