Dairygold milk suppliers' agreement – both sides dig in!


Dairygold milk suppliers’ agreement – both sides dig in!

Both sides in the new Dairygold milk suppliers contract dispute dug in this week, holding their positions ahead of a meeting of suppliers which was scheduled to take place in Mallow on this Wednesday night.

Thursday, 17 January 2013
12:00 AM GMT

Both sides in the new Dairygold milk suppliers contract dispute dug in this week, holding their positions ahead of a meeting of suppliers which took place last night in Mallow. It was organised by the Concerned Dairygold Action Group.

“The wording is the problem,” a spokesman for the group said. He also alleged that a meeting organised between them and Dairygold for last Friday was cancelled and they’d heard nothing since. They’d written to Dairygold inviting them to the meeting in Mallow but hadn’t received a reply, he said.

Chairman of North and East Cork ICMSA, Julian O’Keefe said on Wednesday that both sides had set out their stalls and there appeared to be little ‘wriggle room’. Concerns remain on a number of issues for suppliers, he pointed out, while Dairygold were adamant they were pressing ahead with their plans.

“The biggest problem is that there’s no Plan B,” the ICMSA chairman said. He believes however that there is still time to resolve matters. Last night’s meeting would be ‘a defining moment’ in the dispute, he said.

Another member of the action group said he’d heard that Dairygold had distributed a flyer on Wednesday containing some amendments but he hadn’t seen it and so couldn’t comment on the them.

Dairygold did move to allay suppliers fears this week. In a comprehensive statement issued to The Avondhu the co-op said it wished to reassure its members that they need have no cause for concern in relation to the new agreement.

“The Board and Management have been extremely mindful of their serious obligations, the society rules and the interests of members when drafting this agreement. The agreement was drafted in a short form with the view that members were familiar with the concept of the milk purchasing terms and conditions and the board’s history and integrity in the implementation of same. The investment in the required increased capacity needs to be co-funded by members and bank borrowings in order to ensure that bank debt is maintained at a sustainable level” it explained.

“The milk forecasting element of the agreement is there to ensure the required processing capacity is in place avoiding waste in having over capacity or lost opportunity through under investment, enabling the best possible milk price to be paid” the statement continued.

“Dairygold milk supplier members have always been obliged to supply their milk to the Society. There is nothing new in having an agreement to govern milk supply. Under the rules of the society, the board has an obligation to set down the terms and conditions governing the supply of milk to the Society” it pointed out.

The statement went on:”The milk purchasing terms and conditions have been amended over the years as required and the ability to maintain this flexibility is fundamental to accommodate changes in regulation, industry best practice, quality issues or customer requirements as heretofore. There is no restraint of trade involved in this agreement and members are able to transfer their supply to another processor under the terms of the agreement. Any supplier planning to retire or exit milk production within the seven year period can do so. It is equitable for milk suppliers to have an appropriate level of shareholding if they are availing of the Co-Op’s processing assets and the minimum level is 20% less than the current average milk supplier’s shareholding in the Society.”

“There is no element of compulsion involved in the new milk supply agreement. Dairygold will continue to accept all milk from existing suppliers who do not sign the agreement. However, any expanded milk volumes, above their 2012 supply base, from those suppliers will not share in the full benefits on offer compared to those who do give their commitment to the Co-Op,” the statement continued.

It went on to make a number of clarifications in a bid to alleviate concerns that some suppliers had raised, stating that:

(i)The terms of the signed four page agreement are binding on both parties and cannot be amended without the written agreement of both parties, the individual milk supplier and Dairygold.

(ii) The board assures members that the member funding elements contained in the milk purchasing terms and conditions will not be increased up to 2019, without the approval of individual members.

(iii) Any supplier planning to exit milk production within the seven year period can do so for normal reasons (retirement, ill health, etc.) and their revolving fund contributions will be repaid plus interest.

(iv) Dairygold has no interest or role whatsoever in restricting any farm transfers and will be happy to sign a new milk supply agreement with an immediate family successor, who will enjoy the benefits previously held by the transferor.

(v) The society’s ability to assign the agreement ensures that the commitment to members will continue even in the event of a major restructuring of the society. In the event of any such restructuring, members’ approval (by special resolution of a majority of A1 members) would be required under the aociety’s rules.

The statement went on to say that the agreement is for the benefit of both the supplier and the society, stressing that success is ‘inter-dependent’.

“The milk expansion plan including the milk supply agreement is the result of extensive research, analysis and consultation over the past two years. The society’s representative structure as elected by the members; the regional committees, general committee and the board are the custodians of members’ interests. As a broadly based Co-Op, members can be assured that the governance structure of the society will always seek to safeguard and promote members’ best interests.”

Dairygold then reiterated its call to all suppliers to engage with them in a “one-to-one” consultation to assist them in fully understanding the agreement before signing up to it. Suppliers are asked to contact their milk advisor or call 1890-200840 to arrange an appointment.

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