Farm Ireland

Friday 21 October 2016

Shock co-op boss exit after milk price row

Kerry Group chief Stan McCarthy steps down from Kerry Co-op as 'thirteenth payment' row rumbles on

Published 10/05/2016 | 02:30

Kerry Group chief executive Stan McCarthy stepped down from his role as chief executive of the farmers' body, Kerry Co-op.
Kerry Group chief executive Stan McCarthy stepped down from his role as chief executive of the farmers' body, Kerry Co-op.

An increasingly heated row over the milk price being paid to dairy farmers has seen a bitter division emerge between the multi-billion euro Kerry Group and its founding co-op, with Stan McCarthy stepping down as chief executive of the Kerry Co-op.

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It is feared the move will see milk suppliers' direct access to the head of the global ingredients maker significantly reduced.

The relations between the co-op and management at Kerry Group have become increasingly strained in recent times as farmers feel management has rowed back on a promise they stress was given to pay "the leading milk price". However, the recent row over the 'thirteenth payment' which Kerry's 3,300 farmer suppliers feel was needed to top-up last year's milk price is believed to have culminated in the recent move.

The issue of the 'thirteenth payment' is due to go to mediation after no resolution was found.

Mr McCarthy, who commanded a package of €4.23m last year including bonuses, has resigned as chief executive of the co-op. However, the longstanding company secretary will continue to provide services to the co-op.

"It is a big blow for dairy farmers as they have lost access to the chief executive," a farmer close to the ongoing row said.

"It is a loss of influence for farmers."

A spokesman for the Kerry Group confirmed Mr McCarthy had stepped back from his role with the co-op.

However, they declined to comment on the reasons behind the move or the suggestions the relationship between the Kerry Group and the co-op has become fractured in recent months.

"Mr McCarthy is chief executive of Kerry Group plc which runs the Kerry group. We have regular meetings with all our group shareholders," the spokesman said.

"Stan McCarthy and other executives here have constantly engaged with the co-op and provided executive support to them.

"We will continue to engage with all shareholders and milk suppliers."

The spokesman said that Mr McCarthy's position with the co-op did not need to be formally maintained.

"It is not related to our commitment to milk suppliers. We are fully committed to those commitments through the Kerry milk price contract," he said.

The co-op still holds a 13.7pc stake of around 24 million shares in the Kerry Group plc which is valued at €1.8bn, while farmer shareholders are estimated to hold an additional 30pc of the shares in the group after a number of spin-outs.

Farmers feel the Kerry price lagged behind the west Cork co-ops last year.

The payment dates back to 2011 when a move was made to reduce the co-op holding in the plc to below 20pc which had to be passed by the majority. Farmers say Mr McCarthy promised to pay "the leading milk price" on a like-for-like basis with other processors.

"The leading milk price on a like-for-like basis is defined in our milk price contract which was approved by the board and recommended by the board and signed by milk suppliers - Kerry Group maintains it will fully honour its commitments in relation to that as per our contract," the Kerry Group spokesman said.

The Kerry Group will maintain secretarial services to the co-op, which it is understood to have valued at close to €1m a year.

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