Mr O’Keeffe was speaking following the ICMSA’s meeting in Millstreet on Tuesday, which dealt with the Dairygold milk supply agreement. Dairygold chief executive Jim Woulfe, the co-op’s chairman, Bertie O’Leary, and other senior executives attended.
Mr O’Keeffe said: “The abolition of milk quotas in 2015 is coming closer. Along with the hopes and expectations involved, there is growing concerns among milk suppliers regarding the stability of arrangements post-quota and the possibility that price volatility and see-saw price and supply movements will undermine the viability of milk suppliers.
“This is the ultimate challenge for our co-ops, processors, and the Department: how do we expand our production in the kind of measured way that ensures that we do not see supply surges that can result in price collapse? Not alone in Dairygold, but in all co-ops and processors across the country, farmers are asking the same question: ‘How can co-ops expect farmers to forecast future production levels without any commitment on milk price’? And how do co-ops expect farmers to sign long-term contracts on this basis? Given the massive uncertainty facing farmers, and the kind of external factors that impinge directly on dairy farming, forecasting milk production levels is not an easy task, and ICMSA believes that contracts need to recognise this uncertainty to a much greater extent.”
Mr O’Keeffe said farmers are disappointed that the asset value of their milk quota is being transferred from them to the milk processor with quota abolition, and farmers are stating that processing rights should be allocated to milk suppliers to recognise their long-term commitment to dairy farming. He said this was not even the major cause of dismay among the ICMSA members at the meeting.
“We’re very well aware of Dairygold’s need to finance the expansion on a reasonable and sustainable basis,” said Mr O’Keeffe. “But the proposed penalty of 2 cents per litre on those suppliers who do not sign the contract is absolutely onerous, and is causing a lot of resentment. There seems little point in telling people that it’s entirely up to themselves whether they sign the contract or not, while, at the same time, penalising those who choose not to by this margin. That’s not a free choice; that’s unfair, and we’d expect Dairygold management to re-visit that.”
Mr O’Keeffe said he hoped the Dairygold board and management will address these concerns before the Mar 31 contract deadline.