Farming

Wednesday 30 July 2014

'Rebels' continue to be thorn in Dairygold side

Caitriona Murphy

Published 11/12/2012|05:00

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Dairygold farmers with high milk supplies but low shareholdings are continuing to ruffle feathers at the co-op's information meetings.

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Some of the most strident objectors to the new milk supply agreement appear to be farmers who inherited holdings with high milk supplies but without the co-op shareholding that had been built up on the back of that milk.

The farmers, who are being referred to by some other Dairygold suppliers as the 'Mitchelstown rebels' but are not limited to that geographic area, claim they will be forced to invest thousands in shares over too short a timeframe.

It is understood that 40pc of the co-op's 3,000 milk suppliers will need to buy additional shares to meet the minimum level required.

One farmer claimed that a supplier with a 100,000gal (450,000l) milk supply but a shareholding of just 2,000 shares would be required to buy 16,000 shares at a cost of €16,000 over just two years.

However, Dairygold chief executive Jim Woulfe insisted many farmers had over-estimated the contributions they would be required to make.

In a statement issued to the Farming Independent, the co-op boss maintained that farmers with fewer than 4,000 shares per 100,000l (4cpl) would be required to increase their shareholding at an annual rate of 0.5cpl of milk supplied. In the example above, it would take just over seven years to reach 4cpl on 450,000 litres, and not two years as claimed by the farmer.

Mr Woulfe insisted the Dairygold shareholding requirement was very low.

"Fonterra has a shareholding requirement equivalent to 20cpl and Friesland Campina has a shareholding requirement at 10cpl, both payable before supply commences," he said.

It is understood there are fewer than 60 farmers with such a large disparity between milk supplies and shareholdings. Nonetheless, industry commentators say these farmers are the most likely to expand in the coming years so their opposition to the milk supply agreement is a thorn in Dairygold's side. Heated debate is expected at the Mitchelstown area meeting, scheduled for Thursday night.

In recent days, all milk suppliers received a letter detailing their individual revolving fund and shareholding contributions, based on their forecast milk supply.

Around 750 suppliers have already signed and returned their milk supply agreement to the co-op. But issues such as the 2c/l penalty on those who don't sign up before March 31, the exclusivity clause and the right of the co-op to deduct farmer debts from farmer payments are still causing problems.

Both the IFA and the ICMSA are to meet with Dairygold management in the coming days to clarify concerns raised by the co-op's suppliers.

However, it is understood that some of the contentious clauses in the milk supply agreement are already contained in the co-op rules, even if farmers were unaware of them.

The co-op's current area meetings will be followed by a series of one-to-one workshops commencing in January 2013.

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