The owner of Tasmania's largest dairy wanted to send thousands of calves to China in the midst of a cash flow crisis.
That is, according to documents obtained by Australian Community Media, which appear to be a series of emails and meeting notes outlining a rapidly growing rift between Van Dairy Ltd (formerly Moon Lake Investments) owner Xianfeng Lu and his own company board back in 2018.
The documents are dated from February 2018, about two months before the mass resignation of five board members and then CEO Evan Rolley.
They present a set of directions and concerns from Mr Lu, including:
- A lack of profit and cash flow due to low milk prices;
- The need to keep $10 million in Rabobank at all times to satisfy the Foreign Investment Review Board (FIRB);
- A direction to raise 4000 bobby calves "on their mothers" for meat sale to China with no extra capital expenditure;
- Closing the three least profitable dairy farms and using the land to rear the calves;
- Transporting water from a lagoon more than 100 kilometres away and storing it in trenches instead of investing in irrigation infrastructure.
The directions appear to be responding to requests by the board to spend money on drought proofing the farms, which had been exposed to "dire milk production efforts" after three months of very dry weather.
Mr Lu said the requested capex (capital expenditure) was "not sustainable" due to low milk prices at the time.
"The business is not profitable and very concerned about cash flow," he said.
According to the documents, Mr Rolley responded to Mr Lu's proposal with a stark warning.
"Free ranging 4000 bobby calves with their mothers will fail," he said.
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"No capex for the ongoing operations on existing farms will lead to significant additional costs, loss of longer term profitability and has potential to lead to safety and regulatory failure issues."
Three years later, and many of the warnings in the documents have come to fruition.
"We went into it all in a very positive, optimistic way, hoping to help him deliver on those commitments," Mr Rolley said on Thursday.
"It was very disappointing, and clearly Mr Lu was not in a position to understand the nature of the business of dairying sustainably in Tasmania.
"Let's hope and pray this time he takes the advice that he ignored when we gave it to him, and restores the confidence of the Circular Head community," he said.
Van Dairy Ltd was contacted for comment, but said it would not comment publicly on "possibly erroneous claims or confidential operational matters".
"What the company can state categorically is that VDL is investing in infrastructure, current and new people, caring for animals, including local wildlife, and protecting the environment," the statement from Van Dairy Ltd said.