Dairygold glad with sign-up level to date

Non-expanding milk suppliers will not contribute to the deferred (“13th”) payment mechanism that Dairygold is introducing from May, 2015.

This is just one of the points that Dairygold Co-op hopes it can clarify in one-to-one meetings with members, between now and the proposed introduction of its new milk supply agreement (MSA) by the end of March, 2013. The co-op also said that those suppliers who remain static in production are adequately covered in terms of their shareholding.

In such a case, the only element of funding that will impact all milk suppliers is the revolving fund. For the average [300,000 litre] milk supplier who is not expanding, this means contributing 0.38c per litre for a maximum of 60 months in the seven-year period, taking the 75,000-litre exemption into account.

The co-op also said it is delighted to see that so many milk suppliers have signed the new contracts.

Dairygold chief executive, Jim Woulfe, said: “Dairygold is in the confident position of having a firm plan in place for post-quota expansion. The plan we have developed was well-researched, it gives due consideration to the diverse interests of all our members, and is balanced and fair. Following extensive consultation over the past 18 months, it has now been overwhelmingly endorsed by the society’s representative structure.”

Dairygold’s CEO said the new MSA does not provide a commitment on milk price as the company cannot predict future market returns. However, he said the company’s position in the 2011 KPMG milk price audit demonstrates that it is a farmer-owned co-op committed to returning the best possible milk price.

“It is encouraging that a large number of suppliers have already returned signed milk supply agreements. The latest date for submission of the MSA is Mar 31, 2013, and in the lead up to that date we will work to ensure all milk suppliers know exactly what’s required. Having clarity by that date is essential if the co-op is to mobilise plans for investment and expansion in time for 2015,” said Mr Woulfe. “We have already engaged with hundreds of milk suppliers, through regional and area meetings and on a one-to-one basis, and they understand the necessity of the milk supply agreement.

“Over the coming months, we will work to ensure that every milk supplier has all the information needed. In order to alleviate any anxiety with respect to milk forecasting, the society plans to engage in one-to-one consultations with all milk suppliers to prepare milk-volume forecasts for the years ahead.

“In tandem with that, we have written to all milk suppliers with an individual projection, for demonstration purposes, of the member funding contributions which would apply, based on their 2012 milk-volume forecasts. Most suppliers will pay less than 0.5c per litre, as they already meet the required minimum shareholding. The maximum, monthly contribution required from any supplier for the period up to March 2015 is less than 1 cent per litre (comprising less than 0.5 cent per litre to the revolving fund, and 0.5c per litre to shareholding).”

In regard to member funding, Mr Woulfe said that all contributions are repayable. Revolving fund contributions are repayable in seven years, with interest; shareholding contributions will be repaid on share redemption at retirement and will benefit from share dividend annually.

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