Farm Ireland

Sunday 21 January 2018

Kerry explains its 'leading price' claim

Declan O'Brien

Declan O'Brien

Kerry Group has committed to paying "the leading" milk price on the Irish market.

The company claimed the price would be based on comparable milk solids and milk quality standards to those of other "major" Irish processors.

The commitment comes ahead of a second crucial vote by A-grade Kerry Co-op shareholders, which is scheduled for next week.

The ballot, if supported by the required 75pc of voters, would allow for the co-op's shareholding in the plc to drop below the existing 20pc threshold and would set a new threshold of 10pc plus one share. Guarantees on future milk prices emerged as an issue at the first shareholder meeting and ballot two weeks ago.

On that occasion, Kerry boss Stan McCarthy agreed to clarify a statement that the company would pay what he then described as "a leading" milk price.

A spokesman for Kerry Group said the latest commitment given by the company applied to its current milk production model, which was mainly grass-based. He also confirmed that the details of the package would be included in the supplier contracts that have been negotiated between the company and farmer representatives.

However, he declined to explain what was meant by the qualifying term "major" Irish milk processors, saying that this had yet to be defined.

Some Kerry suppliers expressed disappointment that the proposed milk price agreement wasn't based directly on world market prices for a basket of dairy products or on the price paid by the leading players on the European dairy scene such as Friesland Campina or Arla.

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However, the Kerry spokesman said world market prices for dairy commodities would influence the price paid to milk suppliers.

But he said a linkage between Kerry's milk price and that paid by European co-ops was not feasible.

The Kerry spokesman claimed that Irish and European milk prices were not directly comparable given the larger domestic markets enjoyed by continental processors and the larger outlet they had for fresh dairy products.

Meanwhile, Kerry Group officials met with both the ICMSA and IFA yesterday to discuss the price commitment.

ICMSA president Jackie Cahill said the firm assurances given by Mr McCarthy both on milk price and the future investment for expansion of milk processing were welcome and reassuring to Kerry Co-op shareholders and milk suppliers.

"The direct assurance that Kerry would pay the highest milk price in Ireland during the grass-growing season can be relied upon by farmers as it is our experience that the Kerry Group has always honoured its commitments," Mr Cahill said.

Mr Cahill said the company had agreed to have technical discussions on the formula that would be used to compare the price being paid for milk and specifically milk constituents.

The IFA also welcomed a commitment that the Kerry Co-op board, made up of dairy farmers, would have direct and regular involvement with management in reviewing the Kerry milk price. The IFA delegation also hailed the commitment that any further processing investment required would come from the plc, without any recourse to active dairy farmers.

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