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Aussie Farmers Direct closes shop

AussieFarmersDirectOnline grocery delivery company Aussie Farmers Direct has closed shop as it finds tough competition among supermarket giants.

After 13 years, its time ended immediately after going into voluntary administration on Monday, according to AAP.

“We are sad to announce that Aussie Farmers Direct is closing its operations today. After 13 years of working with many of Australia’s great farmers and delivering their fresh produce to Australian families, it is hugely disappointing that is has come to this. We are simply no longer able to compete against the domination of the major two supermarkets and the influx of cheap imported produce,” said Aussie Farmers Direct on their website.

The Sydney Morning Herald also reported the collapse left 260 workers unemployed and almost 100 franchisees who bought into the business facing financial stress after spending large sums of money buying specialised delivery trucks. The company was losing more than $1 million a month in 2015.

KordaMentha administrator Craig Shepard said Aussie Farmers Direct had unsuccessfully tried to sell the business, and could not recapitalise it or find a partner to support its continued trading.

“Unfortunately, it is not possible to continue trading and the business will stop operating immediately,” Shepard said.

Aussie Farmers Direct has struggled with the tough competition with supermarket giants Coles and Woolworths. The grocery business focus on exclusively local produce to stir away from its competition. Beginning as a milk delivery franchise business, it expanded to include meat and fish, fruit and vegetables, bakery, coffee, deli and organic products. It also expanded to NSW, Queensland, WA, SA and the ACT.

“Aussie Farmers Direct started as one small milk run delivering 100 bottles a week. Over the years we grew to be a full-service grocer to thousands of customers across Australia. We have worked with hundreds of farmers and local suppliers over the years, and we are proud to have played our part in getting farmers and Australian households a fair deal,” said Aussie Farmers Direct on their website.

The businesses’ logistics services will continue to trade and is not affected by the administration. Sheppard said most of the company’s debt is held by entities associated with local and overseas investors and there is no significant bank debt. It invested substantially into the business over the past four years in an effort to transform the company, according to AAP.

“With the support of our customers, we took a stand on many industry issues including fair milk prices, free range eggs and supporting farming communities through the tough times including droughts, floods and financial hardship. We have also enjoyed celebrating our Australian farmers commitment to quality, hard work and resilience,” Aussie Farmers Direct added.

“Unfortunately, we will be unable to deliver any future orders to our wonderful customers. No one will be charged for these orders. Any customer who was scheduled to have a delivery on the afternoon of Monday, 5 March and has been charged for this order will have their order refunded shortly. We would like to thank all our loyal customers, farmers, suppliers, franchisees and staff for their support over the past 13 years.”

The Sydney Morning Herald also reported Robert Cerchiaro, general manager of Red Gem Potatoes in Nar Nar Goon, Melbourne, said his farms supplied Aussie Farmers Direct potatoes and onions across Australia’s east coast and would be hit tens of thousands of dollars by its collapse.

“They’re going to be about 5 to 10 per cent of our business – it’s going to end up being a significant financial impact on us, that’s for sure,” said Cerchiaro. “You can’t afford to lose anything these days.”

Aussie Farmers was founded by marketing professionals William Scott and Jordan Muir in 2005. Both left the company in 2015 and 2014. Documents lodged with the corporate regulator show Aussie Farmers Direct ran at a $12 million loss in 2014 and a $15.5 million loss in 2015, the most recent year it submitted accounts.

The Sydney Morning Herald said the company had 160 employees in Victoria, 59 in NSW and about 13 in Queensland, South Australia and Western Australia. There were 35 franchisees in Victoria, 30 in NSW, nine in South Australia, eight in both Queensland and Western Australia and three in the ACT. Aussie Farmers Direct trades under the name Stay in Bed Milk & Bread Pty Ltd. That company lists its shareholder as Aussie Farmers Holding Company.

ASIC documents list chief executive Brendan Shaw and Australian private equity outfit Equity Partners as local investors. Aussie Farmers Holding Company had $65 million in paid-up capital ahead of its collapse. A meeting of creditors will be called next week. KordaMentha will refund any customers left out of pocket.

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