Farm Ireland
Independent.ie

Wednesday 7 December 2016

It's decision time for Kerry

Published 09/08/2011 | 05:00

A new package on offer to milk suppliers from Kerry Group is again seeking to assuage supplier concerns ahead of the second crucial vote next week on reducing the Kerry Co-op shareholding in Kerry Group plc.

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The vote by A-grade Kerry Co-op shareholders, which is mainly made up of current milk suppliers, takes place in the Brandon Hotel, Tralee, next Tuesday.

The proposal, if carried, would allow for the co-op's shareholding in the plc to drop below the existing 20pc threshold and would be set at a new level of 10pc plus one share.

While the proposal comfortably topped the 75pc acceptance level that was needed to get past its first vote by co-op shareholders, concerns were raised by suppliers regarding future milk prices.

The new offer by Kerry Group boss Stan McCarthy aims to deal with these concerns. It guarantees that Kerry will pay "the leading" milk price among "major" Irish dairies for comparable solids (fat and protein) and quality.

Kerry Group officials claim that this move delivers on an assurance given by Mr McCarthy, made before the first ballot, to put substance on an assurance that the company would pay a "leading" milk price.

Supporters of the current proposal also point to the fact that supplier contracts that have been agreed by Kerry mean dairy farmers have clearance to produce at least 20pc extra milk without any processing charges after 2015.

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Kerry Group can definitely point to an excellent track record in generating employment and wealth for its farmer shareholders and for the region in general.

However, there has been farmer opposition to the changes and this was reflected in the 20pc who voted against the proposal last time out.

For many opponents the main issue has been the guarantee on milk price -- and for some farmers it is still an issue even after the latest Kerry statement. They expressed disappointment that the milk price wasn't more directly based on either world market prices for a basket of dairy products (butter, whole milk powder, skim milk powder, etc) or on the milk price paid by the big players on the European dairy scene such as Friesland Campina or Arla.

Opponents of the deal also question why it is necessary to change the Co-op's shareholding in the company at this time.

The issue of reduced farmer representation on the plc board, which goes from seven to four, and proposed changes in the voting rules for any future ballot on the Co-op shareholding threshold, have also caused concern.

At the end of the day, Kerry's milk suppliers must decide if the deal is right for them. There are 4,400 A-grade shareholders. They should all get out and vote.

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