The board of the Batlow Fruit Cooperative – known as Batlow Apples – is recommending to its members that the co-op be transformed into a company, with outside investment group AusFarm Fresh Group buying up the majority stake.
In exchange, Batlow Apples will receive a $10 million funding injection to spend on upgrading and expanding their production.
AusFarm Fresh Chairman Scott Keddy said that the Batlow Apples company, if it goes ahead, would have the same management structure and personnel as the cooperative, with a new board.
“Our company has already acquired some horticulture properties in [Queensland], and part of our strategy is to expand our operations and invest in other horticulture industries,” he said.
“Batlow Apples has the best and most prestigious brand in Australia, so it makes strategic sense for us to partner with them and help them expand their business.”
Mr Keddy did not guarantee that there would be no job losses long-term, but stressed that it would be unlikely and is not their intention.
“We’ve been presented with an interim plan by management,” he said.
“In that plan there’s no intention of job losses, but you have to develop that as you go along, obviously. We’re looking at creating greater efficiencies and reducing costs, but that’s through investing in technology.
“Management have also presented opportunities for us in downstream operations like Batlow Brewing and Batlow Ciders, which we are also very excited about.
“We understand the industry, and [we] will allow management to expand and grow and future proof the operations, which will sustain jobs and sustain the business – and the growth of such a major operation in Batlow will be good for the whole community.”
AusFarm Fresh Group emerged as an Australian incorporated private company in December 2015, and in February 2016 they bought Stanthorpe Apple Shed and Tomasel Orchards, in Queensland.
Batlow Apples would be their next big buy.
Their current directors include three Australians, and one director each from Taiwan, Hong Kong and Belgium.
The deal being put forward by the Co-op board would see AusFarm get a 63.3 per cent stake in the new Batlow Apples company, making them the majority shareholder and giving them the decision-making power in the new structure.
However, Batlow Apples Director Ralph Wilson said the growers will still operate as they did before.
“We’ve done a lot of research into this organisation,” he said.
“They’re not in it to have control and do what they want to do. They own large orchards in Queensland, and they’re coming to the table, we think, with the right attitude to invest in the cooperative – and from their point of view they don’t want to invest in the cooperative without a say in how its run.
“We do lose a lot of control, but we have a business coming in that will store and pack and market our fruit. That’s the trade-off for control, it’s a brighter future.”
He said the changes floated by AusFarm so far are all things growers would be more than happy to get on board with, such as investing in new and more efficient packing equipment, investing in orchards, distributing more hail nets, upgrading the fruit, and planting new varieties.
The growers that make up the Batlow Fruit Cooperative have until May 1 to decide if they will vote yay or nay to the proposal.
The Co-op needs a 75 per cent ‘Yes’ vote for the changes to proceed.
Batlow Apples’ General Manager, John Power, said that the Board has grappled for several years with a range of financial, demographic and market challenges; and after considering a range of options, is recommending its members to accept the offer from the AusFarm Fresh Group.
“Batlow Apples has a proud 96-year tradition as Australia’s best-known and favourite apple producer,” Mr Power said.
“However, rising costs, declining grower numbers and intense market competition present serious challenges to the long-term viability of the Cooperative.
“In order to address these challenges, the Board of Batlow Apples has spent the last 18 months exploring options to shore up the organisation’s ability to access capital to meet these challenges and begin the next chapter of Batlow Apples long and proud history.
“We understand that the proposal – to introduce a new strategic investor into the business – will be challenging for many members in light of that long and unique history.
“However, just as the varieties, production methods and marketing techniques have evolved over time, the Board believes accessing capital through such an innovative step is a solid plan to continue this evolution. In addition, having a strategic partner that can value-add with potential synergies to the business will also be beneficial to Batlow Apples in the longer term. This is why the Board will be encouraging all the Co-operative members to accept this proposal.”