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Debate begins over Dairygold milk contracts

Dairygold Co-Op has denied that its milk supply contract, which is due to come into force next year, is creating unrest among its suppliers.

The contract, which was distributed to more than 3,000 dairy farmers in the past fortnight, runs from January 1, 2013 to December 31, 2019.

It is understood that some farmers have taken issue with several facets of the agreement, including the 2c/l milk price penalty that will apply from April next year to farmers who do not sign the contract.

However Tim Healy, head of Dairygold Food Ingredients, insisted that suppliers had received the contracts positively.

"Dairygold is one of the first processors to have published proposals to accommodate supply post-quota and we are satisfied that agreement signing is in full flow at this point," he told the Farming Independent.

"Hundreds of suppliers have already returned signed agreements," he added.

The contract requires farmers to forecast their milk production volume 24 months ahead, which the co-op says is essential to allow it invest in expansion and market development in line with anticipated milk flow.

IFA dairy chairman Kevin Kiersey said a number of farmers had expressed concerns to him on aspects of the proposed Dairygold contract.

As well as the price penalty, farmers are concerned about the length of the contract and the exclusive nature of the agreement, which would prevent farmers selling milk to anyone without Dairygold's written consent.

Mr Kiersey said contracts or agreements between processors and producers would be important to protect farmers' security of tenure and the interests of both in the post-quota era.

"However, it is critical that the details of the contract would be well understood and accepted by both parties," he added.

"We in IFA will examine the new contract in detail, and will seek a meeting in the coming weeks with Dairygold to discuss it."

Dairygold's Tim Healy said one-to-one consultations with the co-op's advisory staff would be available to any supplier who needed help or support in completing the milk supply agreement.

"There are four months between now and the end of March 2013, during which we will work with each and every supplier, so that all know for sure what's required by supplier and processor for 2015," he added.

Indo Farming