'Leading milk price' contract approved by Kerry
Kerry Group's commitment to pay the "leading milk price" in Ireland on a "like-for-like basis" is included in the new milk contract which has been approved by Kerry Co-op board.
The "leading milk price" commitment caused a serious rift between Kerry Group Plc and the Kerry Co-op board last year, as the company's milk price lagged behind that of neighbouring processors.
Kerry finally agreed a 1c/l top-up payment.
However, although Kerry insisted that this payment fulfilled its "leading milk price" commitment, some suppliers and industry commentators maintained the company's milk price remained lower than that paid by other processors.
The contract states that: "The price payable by Kerry for raw milk up to the guaranteed volume in any year shall be the leading milk price on a like-for-like basis."
As expected, the voluntary contract specifies that farmers will be able to supply 120pc of their milk quota from 2015 without incurring any charges.
If there is surplus processing capacity, the contract states that it will be allocated to suppliers in a "fair and commercially even-handed way".
Kerry also commit to making "the necessary investment" if overall milk supplies to the group expand beyond the 20pc forecast.
The fears of some Kerry suppliers, particularly in west Clare, that they might incur additional milk transport costs appear to have been assuaged, with such charges ruled out.
The contract states that the company will not put its suppliers at a "competitive disadvantage" by imposing additional costs or charges for the collection or haulage of raw milk.
Reaction to the contract has generally been positive. Pat McCormack of ICMSA said the contract offered certainty for Kerry suppliers and a guarantee their milk will be processed up to 2025 at least.
However, he said the "leading milk price" commitment remained a bone of contention, especially since farmers in the southwest had been badly hit by poor weather last year.
Mr McCormack said Kerry should be "leading from the front" on milk prices and not playing "catch up" by issuing a 13th payment.
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