Challenge collapses

WA dairy industry is in crisis after one of the State's four major processor's announced this morning it had called in voluntary administrators and owed farmers "substantial amounts."

Challenge Dairy has been struggling to pays its producers for their September milk, leaving about 50 South-West farmers chasing payment.

In a statement, a Challenge Dairy spokesman said voluntary administrators would "urgently examine option to recapitalise and restructure the company."

PBB's Jeff Herbert and Simon Theobold have been appointed as administrators.

Mr Herbert said acknowledged the company owed farmers significant sums of money.

"The major creditors of the company apart from the debt owed to NAB are CAD's shareholders, Challenge Dairy Co-Operative and QAF Limited," he said.

"However we realise that CDC owes substantial amounts to its farmer members for the milk supplied to CAD and this has caused great hardship with many of them."

Mr Herbert said the prospect of selling the company as a going concern was excellent.