Farmers urged to seek legal advice over debt before signing milk deal

Farmers should seek expert legal and business advice to assess their projected overall personal debts before signing their Dairygold milk supply contract, warns one member of the Dairygold Concerned Farmers Action Group.

David Thompson, a dairy farmer from Cappamore, Co Limerick, has reminded farmers that they need to assess their overall personal debt to gauge their ability to repay.

“The dairy sector has predicted an average on-farm level of personal borrowings of more than €200,000 per dairy farmer by 2020,” cautions Mr Thompson, a committee member of the concerned farmers group.

“The next three years will be critical for our members. The input costs are going up and up, while the prediction is for the milk price to come down. We need to look at our full on-farm investment costs before committing to any of the costs in this supply contract.”

The ICMSA estimates that the real expansion figure for most farmers will be far in excess of €200,000 in bank debt by 2020. With a 12-unit milking parlour costing €120,000 and 40 extra cows costing €60,000, the extra cubicle storage and concrete costs suggest an even higher bank deb figure.

Mr Thompson said that the action group’s members are committed to Dairygold. Much of their hesitation in regard to the Milk Supply Agreement (MSA) relates to their uncertainty about their personal debt situation from now until the end of the EU’s dairy quota restrictions in 2015, but also their likely bank debt from here to 2020.

Committee members of the concerned farmers group have remained in contact with the co-op’s solicitors, McCann Fitzgerald, seeking to clarify various aspects of the MSA. They remain hopeful that a resolution can be found.

“Our solicitor has advised Dairygold suppliers not to sign the contract. We have met with Dairygold for discussions on the proposals,” he said.