SA’s largest dairy producer, Clover, on Wednesday reported its first loss in more than a decade after writing off a loan to its recently unbundled subsidiary, Dairy Farmers of SA (DFSA). Clover, which reported results for the year ended June, said it had taken a “conservative” stance and impaired the entire loan facility because of the financial uncertainty surrounding DFSA. The uncertainty is about the future direction of DFSA, which will appoint a new CEO and board chair as it grapples with how to price raw milk amid tough trading conditions. DFSA is responsible for the procurement of raw milk as well as the selling, marketing and distribution of non-value-added drinking milk.

It was unbundled from Clover in 2017, with milk producers holding 74% of voting rights and Clover 26%. Clover received the 26% stake in exchange for the transfer of its dairy business to DFSA. The move resulted in Clover moving away from volume-driven raw milk sales and reducing its price exposure to a...

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