Huon Aquaculture paid a total of AUS$16.6m to Ridley Corporation today, July 21, to cover outstanding payments owed to the feed major. Huon also received AUS $4.5m in compensation.
‘Mutually successful outcome’
Ridley Corporation Limited initially instituted proceedings against the Tasmanian salmon major in the Supreme Court in August, last year, claiming Huon had refused to pay for feed supplied to it between February and July.
Huon filed a defense in October stating it had experienced losses in sales and reputation after salmon shipments were rejected and numerous customer complaints filed over the final product’s lack of color. Huon alleged the ‘flesh color’ of the salmon was because Ridley’s feed was not fit for purpose or of merchantable quality – lacking the necessary amounts of digestible pigment.
After a lengthy mediation process, an agreement was made on June 23 to settle with final payments to be finalized by July 21.
Both companies said they had reached a “mutually successful outcome to the mediation process to resolve the commercial dispute”.
Cash in the bank
Speaking to FeedNavigator, Ridley CEO Tim Hart said a full payment of AUS $16.6m had been received today – a sum that covered the feed used by Huon, minus a $1m provision against non-recovery of the debt.
“It’s all been settled, yes. It was settled through mediation,” he said. “We got all the cash back today – less a $1m deductible. I’m very pleased it’s resolved.”
Asked if the proceedings had influenced Ridley’s view on future business with Huon, he said: “The possibilities of working together are still there.”
In an earlier statement, Ridley said it was “optimistic about the prospects of resuming a positive trading relationship with Huon in the future”.
Huon Aquaculture is one of Tasmania’s largest salmon producers – it pulled in AUS $31.5m in net profit after tax for the half year, 2016.
Given Ridley’s current project to shift a large amount of fish feed production to Tasmania, a “positive trading relationship” with Huon would be significant.
Plans for Ridley’s AUS $50m investment to build a fish feed mill in Tasmania were announced earlier this year. The mill is set to produce around 50,000 tons of fish feed per year.
Asked how the project was coming along, Hart said Ridley hoped to finalize the build and be in production within two years.
“We’ve got [capital expenditure] signed off by the board and we have a site which we’ve purchased and we’re now seeking all the planning authorities’ approvals and environmental approvals.”
Hart said the mill would produce salmon feed, primarily, but also feed for other finfish species like king fish and barramundi.
He said once the plant was up and running, “a great percentage” of Ridley’s finfish feed would be produced there and prawn feed production kept at its plant close to Brisbane.
“We’re a long-term supplier to Tasmania anyway, but we’ve been doing that out of Brisbane and obviously that has some supply chain implications. So, we’re keen to get closer to the customers there,” he said.
The CEO said most of the feed would be used to supply the Tasmanian fish market, but some exports to New Zealand and South Australia would happen. He said it would shorten the supply chain for fish producers but also bring new business to Tasmanian grain producers.
“We would like to source locally, it makes sense… It makes sense not to bring stuff across from mainland if we do not have to. There isn’t a lot of excess grain in Tasmania, but there is some and we’ll be capturing some of that,” he said.