Failed live export costs leave farmers out of pocket

Source: 1News

A group of farmers who collectively sold $1 million worth of cattle to a live export company in March are still waiting to be paid.

Heifers of different breeds.

Farmers from around New Zealand sold cattle to Waikato-based Genetic Development (NZ) Exports Limited Partnership (GDEX LP).

The 12,300 head of cattle were destined for China at the end of April this year, however the shipment failed after the livestock carrier, MV Al Kuwait, built in 2016, broke down enroute to New Zealand to collect the animals.

A second, smaller ship was sent but could only fit 4998 cattle on board, so farmers were given the choice to either sell the animals at a reduced rate or take them back to their own farm.

According to GDEX LP’s managing director Dave Hayman, about 360 farmers were involved in the sales process, and now around 40 farmers are collectively owed $1 million and the combined total direct costs and losses to the exporter are well over $5 million.

Hayman said the money owed to the farmers is not part of the GDEX LP losses.

Hayman said the company doesn't have the cash to pay farmers currently due to over $5 million in losses and extra costs such as extra grazing charges on pre-export isolation (PEI) farms, the costs incurred from the smaller shipment and loss on foreign exchange cover that could not be utilised.

“In addition, we have lost major earning opportunity on this shipment, and loss of future income (under restructure).

“So, while we understand it is painful for farmers, we have a major challenge to work through to salvage our business and see if we can continue to create value for farmers,” Hayman said.

Carolyn Guy, MPI’s Director of Animal Health and Welfare, said in a statement it cannot get involved in commercial operations, but is investigating a complaint about the transport of the cattle.

“MPI is aware of the Al Kuwait needing urgent repairs at short notice, and its replacement by a smaller vessel for this particular live export consignment. MPI does not get involved in commercial arrangements between the exporter and vendors.”

She said MPI would become involved in cases where an animal welfare complaint has been received, or a non-compliance with export requirements is found.

“MPI is currently investigating a complaint regarding how the animals were moved from the trucks onto the vessel for this export, we’d encourage anyone with concerns about the conditions of their animals to contact us directly.”

Farmers in a paddock.

1News spoke to three farmers waiting for a settlement. They asked not to be named.

One farmer says he’s still owed over $40,000 by GDEX LP. Hayman said in an email on May 24, seen by 1News, that if farmers didn’t allow the cattle to board the ship on the promise of payment in two weeks, (they provided a “letter of credit” as ‘proof’) that GDEX LP would go into administration and the cattle would be seized. The farmer felt he was left with no choice but to comply.

“The ship left on 27th May and still no payment! I have been getting one excuse after another and am absolutely desperate for the funds,” the farmer said.

“I’ve tried legal action, debt collection agencies, and even turned up unannounced at their head office.

“I’m at my wits end,” he said.

GDEX LP responds

Hayman said the company has taken a massive financial hit from the livestock ship MV Al Kuwait failing to come to New Zealand and has launched a claim against the shipping company.

“We had used the same ship late in 2021 with good success,” he said.

Hayman who has been exporting since 2007, said he’s never faced a situation where a live export has failed.

“Unfortunately, it was one of the largest ones,” he said.

“We apologise and are really frustrated to have these combined problems of reduced income and massive extra cost that have compromised our ability to pay, through events we could not control.

“We are still working hard to solve the problem,” he said.

Hayman said in an email to vendors, seen by 1News, that a creditor has made a High Court application to put GDEX LP into liquidation.

Hayman says going into liquidation would be counter-productive for everyone.

“While it is understandable that [the creditor] would like to get to the front of the queue for payment, this process will not benefit them, (no real assets to claim), and it puts the settlement process at risk for all other farmers who are waiting for payment.” he said.

Hayman says he still believes farmers can be paid and says he’s working with the company’s Chinese partners to do so.

“As soon as we have sufficient clarity and commitment where we can indicate a payment plan, we will inform the farmers. We are sorry for the stress it has caused but we remain strongly committed towards settling all our creditors.”

Cows in pasture shortly after sunrise.

Animal welfare issues

The sentiment however comes too late for one farmer who opted to take his 32 cattle back.

His cattle were booked for the second shipment, but he decided to have them returned. The cattle were sold and left his farm in March and were returned in May. He alleges GDEX LP didn’t pay the Tokoroa farmer grazing the cattle enough to feed them properly.

“Three months after leaving our farm we were emailed and told that the heifers were no longer being exported due to complications with the shipping company and gave us options to sell them on the local market for $750 each (we were contracted to export these for $1100) or alternatively we could arrange and pay for shipping back to our property,” he said.

“We shipped them home and got a vet out to check them as they looked like they had lost a lot of weight and were in poor condition.”

The farmer said he was worried as the animals were in calf and were due in September.

“These heifers had lost on average 0.2-0.7kg per day,” he said.

He said they were so skinny that they would not be able to carry the calves full-term and had to be aborted by the vet.

“The vet also advised the MPI be contacted as this was gross misconduct and a serious animal welfare issue.”

Hayman disputes this and told 1News all cattle were weighed on arrival and most were weighed at departure.

“This data showed that in general the cattle were well managed and maintained weight.”

The farmer has now subsequently made a complaint. A spokesperson for MPI confirmed on Wednesday that the complaint had been lodged overnight regarding the welfare of the farmer’s cattle.

Guy said MPI does have the power to take action, including prosecution, in animal welfare cases.

“We strongly encourage any member of the public who is aware of animal ill-treatment or cruelty to report it to the MPI animal welfare.”

She said MPI is not aware of any complaints laid about GDEX LP.

Stock agent disappointed

Another farmer 1News spoke to said it was his first experience in live exports and only decided to do it because his farm was struck by a severe drought and felt some stock had to be moved.

When a stock agent approached him about doing a live export, the farmer said he thought it would help solve a problem.

“We were caught out,” he said. “Normally I wouldn’t have done it.”

He says he’s owed nearly $35,000 for the 27 cattle he sold to GDEX LP.

“The contract was offered and we thought it was a good idea,” he said.

The stock agent who brokered the deal with the farmer said he can’t believe farmers haven’t yet been paid.

“It’s very frustrating that they can do an export boat and not pay everyone properly and not give a clear timeline of when payment will happen."

Despite Hayman’s reassurance that they will continue to provide updates on progress and do their best to answer questions, the stock agents says, “there’s not enough communication about what’s going on.”

The Government is set to ban live exports by sea, beginning in 2023 following a two-year phase out period.