Seasonality scheme ‘to force farmers to produce milk at a higher cost’

DAIRY farmers in Cork have described Dairygold’s new milk supply seasonality scheme as a monthly quota that will force farmers to produce milk at higher cost.

The farmers voiced their concerns in a meeting with the north and east Cork executive of ICMSA. The chairman of that executive, Julian O’Keeffe, said that the while co-ops wanted the abolition of milk quotas, they are now introducing monthly quotas of their own that will force farmers to produce milk at higher cost, coupled with very severe penalties for supplying in excess of the limits set.

Mr O’Keeffe said: “Milk quotas are in place up to 2015 and Dairygold have the capacity to deal with this level of production so there should be absolutely no need to introduce draconian penalties at this time. If Dairygold feel that some individual suppliers are supplying way in excess of the norms during peak periods, then they should address these issues with those suppliers rather than placing very harsh penalties on all suppliers.”

Mr O’Keeffe said it was not fair for Dairygold to penalise a farmer for exceeding the limits set down, when that farmer consistently supplied 15% for many years in May or June, only to find him/herself at 16% due to circumstances outside his/her control, such as weather or animal health issues.

Dairygold suppliers are also asking why their fellow farmers in Glanbia, where a demanding seasonality scheme has also been introduced, can increase their profile up to 16% with no penalty while Dairygold suppliers at 16% — if they don’t opt for the alternative scheme — will be fined 7.5 cent per litre.

Mr O’Keeffe said: “Time and time again, farmers have been told by Teagasc and milk processors that the most effective way of maximising income was to produce milk off grass and what we now see from Dairygold and other processors is a pricing policy designed to move away from grass and one that will penalise farmers should they fail to meet the required percentages in particular months.

“Given unpredictability of the Irish weather, superlevy issues, animal health issues and milk price instability, a dairy farmer could find himself in a position in April of the following year with a substantial fine.

“What Dairygold suppliers want is a clear plan from their co-op on how they intend to deal with the post-quota situation and this plan should include investment in additional processing capacity if that is required to allow dairy farmers to produce milk without barriers at the most profitable times of the year.”

The ICMSA spokesman said that Dairygold suppliers will support their co-op in introducing initiatives to maximise returns from the marketplace, but they want to see a complete plan introduced for the post-quota situation rather than just a new pricing regime that will penalise some farmers unfairly.

Dairygold said the proposed milk supply peak management programme was introduced following extended consultation with the co-op’s representative structure and is based on the optimum supply profile promoted by Teagasc (a peak milk supply of 14% in May).

“It will encourage an optimum milk supply profile for suppliers through the payment of a spring milk bonus. The bonus will be 5 cent per litre for all February milk in excess of 2% of annual supply. That bonus will rise to 10 cent per litre for all milk supplied in excess of 3%.

“If the programme were applied to 2010 milk, it would have resulted in a net additional pay-out of €500,000 to Dairygold milk suppliers. We estimate that when the scheme is up and running it will benefit Dairygold milk suppliers by extra payments in excess of €1 million per annum.”