Thank you. We'll now move to the formal part of the meeting. I will present the financial year 2022 annual report with Bega Cheese CEO, Paul van Heerwaarden. I'm pleased to be presenting the results for Bega Cheese Limited for the 2022 financial year. A year of extraordinary volatility and upheaval. I'm particularly pleased that despite the upheaval, we have been successful in executing a number of key strategic initiatives and continue to grow and develop the company. I would describe 2022 as a solid financial performance in what was a very challenging environment.
It is the first time that the company has exceeded AUD 3 billion in revenue, which is obviously a milestone for the organization and reflects the growth and acquisitions that the company has made over the past decade. A normalized earnings before interest, tax, depreciation and amortization of AUD 180.1 million and a statutory EBITDA of AUD 149.9 million in the context of the circumstances we were operating in, is a satisfactory outcome. Particularly pleasing is the strong operating cash flow, cash generation of AUD 158 million, which of course then allowed us to reduce debt and make further investments in the business. In the financial year 2022, we reduced debt by AUD 60 million, meaning that our leverage ratio was down to 1.8.
Bega Group has now owned Lion Dairy & Drinks for a little over 18 months. The integration of the Lion Dairy & Drinks business, which we now refer to as Bega Dairy & Drinks, has been executed as planned, and the synergies that we expected to achieve have been achieved. The Bega Dairy & Drinks business brought a strong portfolio of market-leading brands to our company and importantly, significantly contributed to the strategy of our transition to become a leading branded food company. Many of the brands in our portfolio hold number one or number two status in the market, and indeed some are truly Australian icons. I'm pleased to report that despite the volatility of the market, the position of our brands remains strong. Paul will provide more detail on brand performance in his report.
In FY 2022, we saw marked increases in global dairy commodity prices, and while they have declined in recent months, that decline has largely been offset by the depreciation of the Australian dollar. The strength of commodity prices has benefited our dairy ingredients business, and we are now seeing those prices being reflected in the Australian market. We continue to progress our sustainability programs with a number of initiatives implemented as a priority as we work towards reaching our emissions targets and executing the Bega Circular Valley project. As mentioned in my opening comments, the business experienced multiple disruptions in FY 2022. There was significant direct COVID-19 costs, which Paul will outline in a little more detail in his presentation.
There were also some consequential impacts from COVID-19 disruption, which created greater difficulty in managing other unpredicted events such as the floods in Central Australia and Northern New South Wales. Australian farmgate milk supply in the 2022 financial year reduced by approximately 4% and competition for milk remained very strong, and this continues to be the case. Farmgate milk prices strengthened in both the 2022 financial year and again in the 2023 financial year, reflecting improved international commodity prices, subsequent price increases in the Australian market, limited supply, and overcapacity in milk processing and manufacturing infrastructure. Bega Group continues to ensure that it is competitive in farmgate milk procurement and have secured the milk supply we require for the coming year. Moving to the next slide, many people may have observed that we have refreshed our corporate presentation and purpose.
We now refer to the company as the Bega Group. We are, of course, very proud of our origins and the Bega brand, and the Bega region remains the heart of the company. The company now extends far beyond cheese and far beyond the valley, and now includes wonderful brands such as Vegemite, Dairy Farmers, Pura, Dare, Farmers Union, The Juice Brothers, and many other Australian favorites. After many years of successful growth and acquisition, we thought it was appropriate to now refer to the company as the Bega Group, recognizing the expansion of the company while still remembering where the home of the company is. We've endeavored to combine the heritage of the past and our future with our purpose of creating great food for a better future.
This slide is one that many of you will be familiar with, and I won't dwell on it too long except to say that as I speak to you today, our long-term strategy of creating a balanced business with an integrated supply chain that allows the company to respond effectively to changes in both the Australian and international market and in branded and commodity sectors is very well progressed. For the first time in the company's history, there are no significant gaps in our capacities or capabilities. While there have been some challenges over the past 12 months, a number of which remain with us, the strength and resilience of the business has been well demonstrated, and we continue to identify a number of opportunities for business growth and performance. Paul will speak on the financial performance of the business in more detail in overview.
As mentioned earlier, the financial year 2022 is the first year the company has exceeded AUD 3 billion in revenue, and perhaps even more importantly, 82% of our revenue is from the branded segment of our business. The normalized profit after tax for the year was AUD 46.3 million, with statutory profit after tax being AUD 24.2 million. I've spoken regularly about our sustainability programs and have initiated and led our circularity project, which encompasses the entire Bega Valley and its community and is recognized as a leading project in the circularity space. In terms of the Bega Group, we have previously announced our commitments for carbon targets and Scope 1 and Scope 2 emissions, and are working on implementing programs to ensure those commitments are met.
As we implemented the programs to achieve a 50% reduction in emissions intensity by 2030 for scope 1 and scope 2 emissions, we will also focus on scope 3. In FY 2023, we'll be focused on compiling data and information on scope 3. The circularity project will be part of what informs us in terms of how we deal with and manage Scope 3 emissions into the future. Thank you for your attention on this part of the presentation. I will shortly hand to Paul, to CEO Paul van Heerwaarden, to provide a more detailed review of FY 2022 and return to answer questions at the completion of the AGM. Before I do this, some of you may be aware that we announced this morning that this will be Paul's last AGM as CEO.
Paul has been a wonderful CEO for Bega Cheese and has led the organization through a period of great change and development, always giving his all to deal with challenges and execute opportunities. Paul remains committed to the company and as always is keen to ensure the best outcomes for the business and that the transition to a new CEO is well planned and continues the stable leadership which has always been a key element in the success of the organization. Paul has worked for the company for 13 years in a number of executive roles and will reach 6 years of service as CEO in January 2023.
While Paul's achievements are many, I would highlight the key role he has played in the acquisition of the Mondelēz grocery business in Australia, more specifically known as bringing home Vegemite, the reshaping of our dairy nutritionals business through the execution of the various Reckitt transactions, the acquisition of our facilities in Koroit, the acquisition of Lion Dairy and Drinks, and his leadership on the diversity and inclusion programs of the combined group. One of the features of Paul's leadership has been his willingness to give opportunity to others and his capacity to develop people. Paul is always keen to recognize the capacity and capabilities of individuals and his team. Earlier this year, we announced that Pete Findlay had been appointed Chief Operating Officer of the company, and the board is now pleased to announce that Pete will transition to the CEO with Paul's support over the coming months.
Well, I'll have much more to say about Paul over those coming months. It'll all be good, Paul. I'm now really pleased, and I'm sure you'll all join me in congratulating Pete on his upcoming role as well.
Good morning, everyone, and thank you, Barry, for those kind words. While this might be my last AGM as CEO, let me say it's a wonderful business with wonderful people, a number of who are here today. Could have Barb and Pauline join us, Helen, we would have been up to 250 years for the five of you, I think. Unfortunately, they couldn't be with us here today. Just slightly to digress, Barry, so one of my colleagues, John Hutchins, sitting here from my first job working in a meat works in Wagga over 30 years ago, has just popped out of nowhere. T here's a bit of bookending going on here, which is great.
It's a pleasure working for the company and while I still believe there's much more to be achieved, I also believe it's the right time to hand the leadership to others. I remain very positive about the opportunities for the company, which is well-positioned for further success in the future. I know Pete has the capabilities, knowledge, and values that will ensure this, his success, and he has my full support as we transition in the coming months, and I know he has the full support of Barry and the board. I'm pleased to be back in Bega delivering the AGM presentation in person. My first slide outlines the major initiatives during FY 2022.
From my perspective, it was pleasing to see the ongoing progress of important strategic projects despite a very challenging year in terms of disruption and unavailability of internal and external resources. Our key focus coming into FY 2022 was to ensure that we realize the synergies from the acquisition of the Lion Dairy & Drinks business. While synergy realization was successfully executed, it's important to note that there are also other sizable projects, in particular, the transition from the Lion Group IT infrastructure to our cloud-based network, which was completed ahead of schedule and with minimal disruption in our operations. As we further integrate the business, we continue to see underlying growth in key categories, channels, and markets, despite the various disruptions throughout the year.
We continue to invest in our digital platform and network infrastructure with ongoing automation and rationalization projects, continuing to reduce our cost to serve and improve our service and delivery performance. The early termination of the Reckitt agreements announced last financial year were finalized during FY 2022, with early termination payments received and a reset of our infant formula business, including entering new canning agreements. Our infant formula business has now stabilized following market disruptions for a number of our customers, particularly in the China market over the last couple of years. The rationalization of some of our processed cheese manufacturing lines across our Bega and Strathmerton facilities has provided increased efficiencies. Our processed cheese business continues to grow, particularly in export markets, and we're also identifying opportunities in the domestic market where processed cheese provides a lower retail price point compared to natural cheese in an inflationary environment.
I should also note that our processed cheese manufacturing and technical capability has supported the launch of our plant-based cheese products, which while are currently only small volumes, will provide good growth in the coming years. I'll cover the various sustainability initiatives later in the presentation and note that we remain on schedule with major capital projects across our manufacturing logistics network. This includes large investments in sustainable packaging across our flavored milk business and also new and growing pack formats in the yogurt business.
Moving to the next slide and the commercial overview, it is fair to say that the growth and new product innovation that we are very proud of through the year has been overshadowed by the impact of COVID-19, devastating floods across South Australia earlier in the year, and Northern New South Wales and Queensland in March, as well as global supply chain issues that we continue to closely manage. Each of the points on the slide will be covered further throughout the presentation. This next slide outlines our business model and the two segments that we report on. While we focus on growing and developing our core branded segment, our bulk segment continues to perform the critical role in supporting the branded segment with ingredients on a flexible basis throughout the year.
As an example, during periods of channel disruption in the branded segment caused by the Omicron variant late last year, we were able to immediately divert milk from our fresh milk plants into our commodity plants and take advantage of strong international prices. This allowed us to maintain a profit focus for the upstream bulk segment, which remains an important part of how we manage and report the financial performance of the business. I'd like to share some observations on the two segments of our business. Focusing firstly on the branded segment, which obviously has strong revenue growth and earnings growth reflecting our acquisition of the Bega Dairy & Drinks business.
We were pleased to note that we did have good underlying revenue growth in all of our categories in the BDD business, with particularly strong growth in the yogurt and juice categories, which were all around the 3% growth rates. Our spreads business continues to perform strongly, with Vegemite and peanut butter sales increasing by almost AUD 10 million. We experienced good growth in natural cheese and processed cheese from our contract packing business while experiencing challenges in our cream cheese's nutrionals business as we reach price points that were well beyond the capacity of some of our Asian markets. The bulk segment of the business was down a little in both revenue and earnings, reflecting a decrease in overall milk intake, changes in our infant formula business associated with the Reckitt arrangements, and decreased demand from other customers.
We did benefit from the strong commodity price, particularly in bulk cream cheese and milk powders, as commodity prices increased so strongly, particularly in the second half of the year. There was a significant impact from COVID-19 costs in our business, which I will detail later in the presentation. In the reconciliation of our normalized result, there are two noteworthy items, which are the termination of the Reckitt contract and the continued Bega Dairy & Drinks transaction costs. I'll not dwell on this next slide for too long. In brief, we were very pleased with the cash generation in FY 2022, which enabled us to both continue to invest in the business and reduce debt by 18%.
Our leverage ratio in FY 2022 reduced to 1.8, an outcome reflecting strong receivables and inventory management despite the impact of significant COVID-19 costs on the business earnings. The company has a strong balance sheet and extensive property portfolio, a property portfolio, and an extensive property portfolio as well, and continues to investigate the potential sale of our Port Melbourne site. As mentioned, the business generated operating cash flows of AUD 158 million. Capital expenditure, inclusive of the packaging and capacity projects I mentioned earlier in the presentation, amounted to AUD 72 million, and repayments of borrowings of AUD 83 million significantly improved our gearing. Included in the cash flow are dividend payments of AUD 29 million and the proceeds of some minor property divestments amounting to AUD 7 million.
I'm sure like me, many of our shareholders were pleased if they never heard the words COVID-19 related costs ever again. We've spoken on a regular basis about the direct costs of COVID-19 to our business in FY 2022, which accelerated in the second half of the year, and particularly impacted our branded business. To perhaps provide a little more color on the COVID-19 impacts, as an example, absenteeism peaked at around 30%, which put huge pressure on our facilities. We had a direct absenteeism cost predominantly reflected in our branded business of approximately AUD 6 million. Additional rapid antigen testing costs of approximately AUD 3 million. Facility shutdown costs of approximately AUD 8 million in circumstances where we couldn't open factories or had to stop lines.
It's also worth noting that the impact of COVID-19 did create additional difficulties in managing other unexpected one-off events, such as the floods in Central Australia, Northern New South Wales and Queensland, which closed down rail access and amplified the already shortage of trucks and drivers. Overall, direct COVID-19 costs were in excess of more than AUD 40 million in FY 2022, and while there remains some supply chain challenges, we are pleased to see the impacts largely behind us. Reflecting on FY 2022, I thought it may be appropriate to share my perspective on the transformation of the company over the last five years. This slide details our transformation from prior to 2017 as a commodity processor and contract packer through to today, where we are positioned as a diverse and growing multi-channel integrated branded business operating across both international and domestic markets.
I won't go into the detail on this slide, but I'd like to draw your attention to the box on the left-hand side of the page and note that for many years, the profitability of Bega was driven by large, long-term third-party packing contracts and an export dairy commodity business. Significant headwinds across both of those businesses required a change in our vision, which was to become a great Australian food company with a strategy focused on building a multi-channel branded business. The middle box is a list of various acquisitions and other major initiatives that we have executed over the past five years. These acquisitions and initiatives were all about diversifying and growing our branded business and addressing the major headwinds we were facing into pre-2017.
The divestment of some infant formula assets in 2017, and the closure of the Coburg cheese facility a few years ago, were also necessary to rightsize our manufacturing network and align with market opportunities. Today, we are one of Australia's largest branded food and beverage companies, and it's fair to say that we have to navigate a number of challenges as we have made this transition, including the impact of drought, bushfire, and floods. I'll speak about the outlook for FY 2023 later in the presentation, but note that the material spike in input costs did provide further challenges as it has impacted us in the short term, but doesn't lessen the opportunity for future growth.
This next slide demonstrates the transformation I was referring to on the previous slide and includes our longer-term sales growth chart, illustrating a 30-fold increase in sales from approximately AUD 100 million 20 years ago to AUD 3 billion in FY 2022. The pie charts on the right-hand side of the page provide the increase in the proportion of branded sales over recent years and reflects the full year impact of the acquisition of the dairy and drinks business. The quality and market strength of our brands, including the growth and market share of our portfolio, is well illustrated in this slide. As you can see, we are experiencing strong growth in most of our categories and maintain our market-leading positions. Yoghurt continues to be a highly competitive category, with each of our brands playing a key role in the overall portfolio.
Our milk-based beverages, led by Dare, continue to grow, as has Vegemite and our peanut butter range, with new innovations, which I'll cover on the next slide. Investment in our core brands increased during FY 2022, including a number of activations across all categories and new product variations and pack formats such as the new squeezy Simply Nuts innovation. The launch of lactose-free offers for Pura whole milk and our famous Farmers Union Iced Coffee in South Australia have performed very well. This next slide is an overview of our manufacturing network, which we've provided at many previous investor presentations and is worth revisiting for a moment. Our national network of manufacturing sites, along with our extensive chilled distribution network, continues to support the growth of both our national accounts, but also, and very importantly, our local business.
We continue to see opportunities for rationalization and optimization across our own network and indeed across the industry. This slide includes the Dairy Export Trend Index, which is the red line, and our Southern Farm Gate Milk Price Trend, which is the green line. As expected, these two lines are highly correlated and also highly variable. You can see the low point of the Dairy Export Trend Index in the middle of the slide around May 2016. The doubling of the index over the next four years. When COVID-19 emerged, the index quickly plummeted by 40%, only to rebound to new highs about six months ago. We've now included an additional index, the blue line, which represents the Private Label Milk Price Index for the major grocers.
This line is basically the AUD 1 per liter milk that was introduced in January 2011, which remained flat over seven years until the AUD 0.10 per liter drought relief payment was introduced. A subsequent increase introduced last year, followed by the more recent increase to AUD 1.55 per liter for a 2- liter bottle, has seen a cumulative 40% increase in private label milk prices since we acquired the Lion Dairy & Drinks business in January last year. I would say that this is really important, a really important development and positions us well to, as the inevitable changes in the global commodity cycle occur in the coming years. We continue to report on our five focus areas for corporate social responsibility. In brief, we continue to progress improvement in the nutrition of our product, particularly our aim to reduce salt and sugar content.
We've implemented a number of initiatives across diversity and inclusion, which is a personal passion of mine, including becoming a signatory of a HESTA 40:40 gender diversity pledge. We are on track to achieve our targeted reduction in scope 1 and scope 2 emissions by 2030 and have commenced measuring our scope 3 emissions, which represent a material component of our overall carbon footprint and are being dealt with as part of the sustainability and circular economy initiatives that Barry is leading. Packaging targets are also on track as we approach 2025 and our commitment to the Australian Packaging Covenant. While water sustainability and the reduction of water usage across our manufacturing sites is also on track to achieve the 2030 targets that we have set.
Before I hand back to Barry, I will confirm the earnings guidance that we have previously provided for FY 2023, which was a normalized EBITDA in the range of AUD 160 million-AUD 190 million. As outlined in the guidance note, we had initially expected Victorian farm gate milk prices to increase in the range of 15%-20% over FY 2022 closing prices. Strong competition for milk through June and July resulted in further increases in pricing, which were approximately 30% higher than the closing FY 2022 farm gate milk price. Coupled with other cost increases, for example, oil, resin, packaging, coffee and sugar, we've seen a significant year-on-year increase in cost that will be partly offset by accelerating some of our cost out and efficiency programs and increased returns from international dairy commodities.
The overall net increase in cost is circa AUD 350 million-AUD 400 million, which is about AUD 30 million-AUD 35 million per month. During the first quarter, we have phased in price increases in market to cover these increased costs. The timing of this phasing of pricing in the first quarter was impacted by a number of factors. However, I'm pleased to report that we've now been successful in achieving price realization in the market, and this has now been reflected in the monthly financial performance of the business. While the focus of the AGM is the business performance of FY 2022, I'm sure many of you will be concerned for our dairy farmers and our staff, particularly in Northern Victoria and New South Wales, who have been impacted by the current floods.
As always, in times of crisis, our teams and colleagues step up and support one another and deal with the many and varied challenges. While we have had both staff members and farmers directly impacted by the floods, I'm pleased to say they are all safe. From a business perspective, our processing facility at Tatura has been able to manage the impacts of multiple day power outages and the logistics challenge of collecting milk off farm and having it processed. I would not only acknowledge our team, but also the teams at Fonterra and Saputo, who have assisted us in managing our milk supply in circumstances where we were unable to process it within our own infrastructure. We do not expect the impact from the floods to have a material financial impact on our business performance in 2023. Thank you. Barry.
Thank you, Paul. Reflecting on the 2022 financial year, I have to say that in a year where the challenges were many and the projects were many, I feel very comfortable with what has been achieved by the company and the leadership teams. I think it is testament to the knowledge and experience of our people and the capacity and capability of our infrastructure that we have navigated what has been one of the most volatile periods in recent history and continue to position the business for the future. As Paul has outlined, our transition to a branded food company continues to be successfully executed. The important balance of the business we now have allows us to take advantage of commodity prices and global demand when that is appropriate, while also having the comfort of the greater stability that ultimately our branded business will bring us.
I believe this positions us well to manage any headwinds, risks, geopolitical or market changes that may occur. We now have stronger underlying brand growth in a number of our key categories and are seeing a more settled market and a return to post-COVID-19 conditions. Many of you may have noted the announcement regarding our joint venture with Vitasoy issued last week. We don't currently have any further update on that announcement. As mentioned in our release, Bega Cheese recognizes the growing market importance of plant-based beverages and products and will assess its options to continue involvement in this sector if its interest in Vitasoy Australia is acquired by Vitasoy International.
I think it is very important to note that the inelasticity in pricing around white milk has now been changed in recent times, and we are seeing movements in white milk better reflecting both the cost of production for farmers and the alternate returns. There were indeed significant cost increases in late FY 2022, which we have discussed, and it is pleasing that we are now seeing those increases reflected in the market. We continue to observe that there are a great many further opportunities in the business efficiency and cost out programs. Whilst we have been happy with the integration of Lion Dairy & Drinks, or now Bega Dairy & Drinks, and very happy with how the businesses are coming together, we do believe there are further opportunities for improvement in our business.
In this very competitive farm gate milk procurement environment, I am pleased to report that we have been able to secure the milk that we require for the year ahead and are comfortable about securing milk beyond the year ahead. I think that the reality is our long-term relationship with our farmers and our deep understanding of the issues that our dairy farmer suppliers manage assists us greatly in securing that supply. We continue to execute our sustainability and circularity initiatives, and they are something that, as Paul mentioned, particularly in the circularity space, I continue to lead and have a direct involvement in. There continues to be a lot of discussion around both geopolitical risk and biosecurity risk, which is very appropriate.
We work closely with government and industry on these issues to ensure that there is consistent and appropriate planning and response in the areas that can impact both the industry and the community. Ladies and gentlemen, if I was to summarize where we are today and our feeling about moving forward, I would say that we are a very diversified business, well-positioned to respond to the various market scenarios, much of which has been demonstrated in the 2022 financial year and will continue to be demonstrated in 2023. We can be very comfortable that the infrastructure, the brands, the capability, and the knowledge that we have in place is what is required to create value for our shareholders and other stakeholders. Ladies and gentlemen, that brings us to the end of the presentation.
Are there any questions for Paul or I or any of the other team members for that matter? Brett, I'm aware that you have some, but I might start with the audience first if there are any there.
Yes.
My name's Leonard Soyim. I can't be classed as a local 'cause I've only been here for 15 years.
That's all right. We'll give you a pass.
I've been a Vegemite kid ever since I was.
Oh, right.
That's all right.
I've been a Vegemite kid ever since I was a kid, and also since I was employed by Kraft Foods in Port Melbourne in 1966. That's a bit of a background. I would like to congratulate you on your report and where the company's going and all the rest of it. This isn't a question of where are you going and what are you doing, but it is a question of why the market doesn't see your share price reflective of what you're doing. For instance, July 18, the share was roughly AUD 7.67. It opened this morning at AUD 3.22. With respect to AUD 3 billion, and congratulations once again, dividends in 2016 were 9.5 cents a share, 2022, 11 cents a share. I'm just wondering what you see that the market is seeing.
I know you can't control it, but have any of you guys got a comment? Thank you.
Thanks for the question. I think I've got to be very careful in terms of, I guess, diving too deeply on, as you say, a decision that the market largely makes. I think people are very aware that the market responds quickly to bad news and perhaps a little more slowly to longer-term strategic positioning. We do know what's occurred in the last year, and particularly in FY 2022, where we saw the price adjustments. One was, of course, the impact of COVID and how that was managed through the business. As we've outlined, I think that has had a significant impact.
That further impact of those very strong lifts in input costs, whether it be milk or whether it be other inputs that Paul outlined. I would probably make the comment that the market tends to want to be sure that we are going to fulfill our strategic direction and put the numbers on the bottom line that they might expect.
It's probably not appropriate for me to give an opinion on where I see the value of the share, but I think it is. I think many people would say that the market tends to, as I said, respond very quickly to some of the news that impacts you in the short term and perhaps a little more slowly as you're outlining what your forward strategy is. I'd probably like to say more, but the reality is that I should limit what I say given the position that I hold. Paul, I don't know whether there's anything you would like to add to that, I think.
It is an important question and I can repeat some things that Barry said. If we look over the course of the last two, three years, it is really challenging because we're continually talking about these one-off costs and how long do you talk about one-off costs for and they're not one-off. The reality is over the last three years with issues in milk supply decline, COVID costs and flood impact, the ability for us to recover those costs in pricing in the market has been really challenging for us.
You know, we've started off this year, as I outlined in the presentation, you know, we've got earnings guidance of AUD 160 million to AUD 190 million last year, our normalized EBITDA of AUD 180 million. We come into the year with cost increases of AUD 350 million to AUD 400 million, you know, and it's our job to deal with that. I'm not shying away from that. We start off, you know, AUD 230 million underwater, and we have to work hard to actually get that back. You know, in a year like this year, you know, we were still dealing with milk price increases well into July. The ability, we can't go back to July 1 and reset those prices.
We, you know, you have a couple of months of not being able to get that price recovery. As I've said in the outline, we've got there as we've got into the sort of the second quarter. We've got good run rates. The challenge is we weren't able to get that significant increase through supermarket pricing, through general pricing as quickly as those costs were coming at us. We've got, for example, a 13-week notice, notification period with supermarkets. We get cost increases, they come at us. The challenge is there. We look at the charts with the dairy commodity prices and the price inflation.
If we see that settling down and getting into a much better rhythm, we go into the second half and into next year with really, really positive run rates. Okay. We can't do much more than that. It's an unfortunate situation, but it's the situation we're in at the moment.
Well, thank you for your question, and I think thank you for the support of the room. I think I have been in this role a very long time, and as I guess I said in my speech, I'm very comfortable with the strategy of the business and where we get there. I guess it's part of Paul's and my job and Pete's job that we need to convince the market that there is great value to be had in owning the shares of Bega Cheese. Brett, did you have some?
Right
The first question is from Andrew Fitzsimons. What else can Bega Cheese do to encourage customers, suppliers, shareholders to engage with climate change challenges?
Thanks, Brett. I think I would probably talk about this in a very personal sense in the fact that my experience as we've initiated the circularity project is that it is a challenge for all, if you like. It's a challenge that sometimes is illustrated in a form that seems beyond the reach of each of us to make a difference. The reason why we're running the circularity project in the Bega Valley, and which we will then take beyond the valley, is that we think we need to engage the entire community. What? Who are we engaging here? We're engaging here.
It's not just the dairy farmers that are engaged here, it's the beef farmers, it's the forestry industry, it's the oyster growers, it's fisheries, it's the orchardists, it's even the egg producers and everybody that you can think of that is involved in food production here, and the local council who deal with all that waste management that they have to do. Engaging everybody and everybody taking an action.
I always say, "If you can do something small every day and learn something big every day, you'll start to recognize the challenge that is climate change, but you will also start to see that it is a genuine community effort that solves the challenge," and not what I sadly think we've experienced over far too long, which is this polarizing argument that is had about, you know, what should or shouldn't be done or how it should be done. I think, you know, I've always taken the belief, and I suppose it's best reflected in Bega Cheese, that you just keep taking steps forward, and you think very carefully, and you consult widely, to make sure that you are heading in the direction and making the difference you wanna make.
I actually think, you know, to the shareholder that formally sent that question in, thank you for the question, but I think the reality is it is about engagement, not about debate. It is about actually people sitting around together from all sorts of different beliefs and saying, "Well, what actions can we take that make a difference?" If we, if you make a difference in your own backyard to start with and then go beyond, that's how we'll solve the problem. That's how we'll get community engagement.
A final question is from Megan Hewitt. What action is the group taking to make the packaging for the various products more likely to be recycled? For instance, I've noticed Mildura drink lids have been changing to black recently. Black plastic of any type tends to not be recycled through curbside recycling bin program, which is why plant pots aren't accepted in these bins and why supermarkets are moving away from black plastic for meat trays, for instance.
Thanks, Megan, for your question, and it's a really important one. What she's talking about, not that particular lid, but she's talking about the lids on our products. We sell a lot of drinks products and also our spreads portfolio and lids. In a lot of cases, the lids have a pigmentation in them which will discolor the recycled material, and it goes through the process and makes it not suitable to be used in recycled packaging. While you can actually recycle a black lid, the practical reality is that it discolors and it won't be. We're progressively changing over with our packaging.
We've signed up, as I mentioned earlier, some time ago to the 2025 Australian Packaging Covenant through our Planet Pledge program, and that basically sees us with 100% of our packaging material being recyclable, reusable, or compostable. Also that 50% of the materials that we use in our packaging comes from recycled material. Currently, as of today, and that's by the end of 2025. Currently today, we're at about 82% of our packaging is recyclable, reusable, or compostable, and about 27% of the material we use in our packaging is recycled material. A couple of examples that we've implemented, and we're implementing and rolling this out on a progressive basis, and we're well on target to achieve our commitments by the end of 2025.
Recently, with the Juice Brothers product, one of our premium ranges in orange juice, we've got the 1.5-liter packaging and the 500 ml packaging that has moved over to recycled PET, including putting a clear lid on the top so that it will be recycled. That's going very well for us. Also earlier this year in Tasmania, we switched over all of our packaging for flavored milks from high-density polyethylene to recycled PET. That's the sort of cloudy material that you'll see in like a 2-liter milk carton, going from that to a very clear PET bottle. Product looks great.
The acceptance with the consumer's been fantastic. That's 100% recycled PET, and we'll progressively roll that out across the rest of our range over the course of the next year or so. Yeah, that's where we're at. We're well on target. A few challenges in there, but we've been able to get some really easy wins. Some of this requires capital investment, the kind of investment that I covered off in the presentation earlier. Some of it requires just a change. The big challenge as a country is how we get recycling becoming a reality and how we get those materials sort of moving through the supply chain through to processors like ourselves.
We're in pretty good shape, but we've still got a fair bit of work to go. Yeah, thank you for the question.
Are there any other questions? Okay, ladies and gentlemen, we've now come to the formal part of the meeting in terms of voting. A poll is being held on all resolutions at this meeting. If leaving early, please. Sorry, I'll try again. If leaving early, place completed voting cards in the ballot box by the registration desk. For each item of business, I will first open the floor for the discussion, and then we'll put the motion for the item to the meeting and ask you to complete your voting cards in relation to that item. Share registrar Ms. Julie Stokes of Link Market Services Limited will act as Returning Officer in relation to the poll. If there are any aspects regarding voting that you are uncertain about, please ask one of the registrar staff.
The result of the poll will not be available before the end of the meeting. You can, however, obtain the results of the poll later today by visiting the company's website or via ASX. The first matter, the two resolutions are the adoption of the remuneration report for the year ended 30 June 2022, and the election of directors. Firstly, to item two in the notice of the meeting. The remuneration report on pages 40-52 of the annual report outline the remuneration for the board, executive CEO, and other key personnel. In setting remuneration, the Nomination and Remuneration Committee refer to market and external advisors. I would inform the meeting that the following proxies have been received in respect to the remuneration report. I will be casting the undirected proxies in favor of the motion.
Are there any questions on the remuneration report? Thank you. I will now remove the remuneration report for the period ended 30 June 2022 adopted. I will now put the motion to the meeting. Would you please now complete your yellow voting card in relation to item two. While you're doing that, I'll move on to the election of Patria Mann. I might just invite Patria to say a few words before we press this forward.
Thank you. Good morning, ladies and gentlemen. It is my pleasure to be here today and to offer myself for re-election to the board. My background, including 20 years diverse experience as a non-executive director, is detailed in the AGM notice and annual report. I joined the Bega Board as an independent non-executive director three years ago. On my appointment, I said I was drawn to Bega's vision to be the great Australian food company. Since then, and consistent with its vision, Bega has acquired a portfolio of market-leading iconic Australian brands and through the acquisition of Lion Dairy & Drinks. Bega has also transformed itself into a predominantly branded business over that time.
The last three years has involved significant challenges for the company, including ever-increasing competition for milk supply, significant increases in farm gate milk prices and other input costs, drought, fire, floods, and COVID labor issues, as well as the integration of drinks and dairy into the business during a period of lockdown and closed borders. Despite these challenges, which management have embraced, Bega's long history of manufacturing dairy products, its market-leading positions with a number of trusted, iconic brands, and strong distribution networks makes it well-placed for the future. If elected, I look forward to the opportunity to continue to contribute to Bega's future success. Thank you.
Thank you, Patria. Before we proceed, I would like to inform the meeting we have the following proxies in respect to Patria's election. I will be casting the undirected proxies in favor of the motion. Are there any questions? I will now put the motion to the meeting. If you haven't already done so, please record your vote in relation to item three. Ladies and gentlemen, thank you very much for your attendance at this year's AGM. If all votes have been completed, please ensure you lodge your yellow voting cards in the ballot box stationed at the registration desk to ensure your votes are counted. The poll will remain open for a further five minutes.
For those online, unfortunately, you won't be here for a cup of tea, but I think for those that are here with us, I look forward to joining you over a cup of tea and a chat. Thank you very much. I now declare the meeting closed.