Still all to play for in ‘milk agreement’ controversy
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The imminent abolition of milk quotas (which limited farmers to producing a certain amount of milk in any given year) will create a radically altered economic landscape for Irish farming. In a best case scenario it has the potential to open up all kinds of possibilities for those involved in milk production; on the other hand, even experts concede it's uncharted territory for a sector historically bound to the quota regime.
Dairygold is a significant player in the food production sector and like similar organisations throughout the country is having to face up to this brave new world. Dairygold, which started life in 1922 as Mitchelstown Co-Op, has ridden out many a storm since then and undoubtedly will navigate a way through the current impasse which sees it in conflict with thousands of shareholding farmers who, at the prompting of Dairygold, feel obliged to sign a legally binding agreement. Is it legally binding? Can it be legally challenged, can it be renegotiated - is it even a contract?.
For their part Dairygold say that they held approximately 50 meetings before drafting the controversial agreement. They go on say that they 'listened to all observations, comments and concerns arising in regard to the introduction of the milk supply agreement'. The agreement was produced, sent to farmers and included the proviso that those who didn't sign would be docked 2 cents for every litre of milk supplied. In fairness to Dairygold they quickly reversed this penalty clause, however, this in relation to other contentious aspects of the agreement, has generated considerable anti-agreement feeling which was vented at a public meeting held in Mallow GAA complex on Wednesday night last.
A hall full of vexed farmers isn't the ideal setting for tweaking and finessing the fine print that will ultimately iron out the differences between the two sides. Neither, with respect, is the presence of solicitors. Given the stakes involved the opposing forces didn't want to be shown up and, understandably, legal advice was sought and secured with the 'concerned farmers' and Dairygold bringing along their legal experts. Oliver Ryan-Purcell represented the farmers with Daire Hogan putting Dairygold's side of the argument.
Illustrating the sometimes volatile nature of the meeting was the overwhelming show of hands refusing any contribution from Dairygold's perspective. When it was pointed out to Conor O'Leary (who chaired the meeting) that a legal represenative from Dairygold was present, the mood of the meeting changed and Daire Hogan proceeded to take his position at the top table. Again, in fairness the two legal representatives were measured, reasonable and respectful in everything they said. Mr Ryan-Purcell said the agreement was far too loose, vague and ambiguous with Mr Hogan stating that the agreement was balanced and essential in face of the challenges facing Dairygold and its shareholders.
Both Mr Hogan and Mr Ryan-Purcell agreed that some aspects of the agreement were open to interpretations and that to clarify matters, additional legal advice may have to be sought.
Following the Mallow meeting, Dairygold, in a tatement said while it would encourage suppliers to seek appropriate advice, 'it is important that such advice would be from professionals who have a clear understanding of the Co-Op ethos, the existing Dairygold Rulebook that governs the relationship between the Society and its Members, plus the function of the representative structure'.
"The importance of this was evident when the Co-Op analysed advice given, and questions raised, at a Mallow meeting by a Tipperary-based solicitor engaged by some concerned Dairygold milk suppliers. The Co-Op maintains that that solicitor’s misunderstanding of the Milk Supply Agreement, the Co-Op’s Rulebook and Co-op law and his commentaries advising farmers not to sign the Milk Supply Agreement which has been approved by the Society’s elected representative structure, has raised unfounded concerns among some suppliers", the statement read.
The Co-Op further states: "Dairygold cannot gamble farmers' money by constructing significant additional processing capacity without a clear commitment from milk suppliers as to what their individual expansion plans are, and that this cannot be properly determined without a fit for purpose and consistent Milk Supply Agreement. Investment cannot be justified on guesswork as over or under capacity would prove to be expensive mistakes which would negatively impact milk price."
While a show of hands isn't the most scientific approach to decision making, there was however, almost unanimous support for a motion on the night that Dairygold completely revisit the milk supply agreement in its current format.
Having invested so much time and energy in the agreement, it seems unlikely that CEO Jim Woulfe and his management team will go back to the drawing board. More likely is a skilled redrafting that might prove more palatable to farmers, all of whom need Dairygold as much as Dairygold needs them.
Dairygold has begun a three month programme of one-to-one meetings with suppliers to help each supplier work out their own milk expansion plan and its implications for them.
Dairygold states that by the end of March, the Co-Op will have 'a clear view of members’ intent as regards commitment to expansion, to justify processing expansion or not if the two way commitment is not forthcoming'. "Dairygold has asked farmers, the farm organisations and other key stakeholders in the dairy industry to reflect carefully on the challenges and implications of milk expansion. Dairygold reiterates its commitment to putting the required Processing Capacity in place for Milk Suppliers who are committing to their Co-Op."
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