Dairy farmers switch co-ops

Milk trucks from Tipperary dairy co-op Arrabawn have made their first collections from 12 ex-Dairygold suppliers in Kilcorney, Co Cork.

While this move sees more than 3 million litres of Cork milk going to Nenagh, it follows the recent defection of 20 Arrabawn suppliers to Dairygold, with an annual supply of 15 million litres.

Conor Ryan, Arrabawn chief executive, said: “We started our first collections from the Kilcorney area from the group of farmers who approached us. We have also been approached by other Dairygold suppliers, and we will continue to look at all viable opportunities in the future.

“We put sufficient processing capacity in place for our own milk. Our factory is very busy at the moment and we are working our way through a few options. Every plant in the country seems to be full of milk. We will reach our peak supply within the next two weeks.”

Most co-ops have seen suppliers switching allegiances since the end of EU quota restrictions on April 1, but numbers defecting have been small. Dairygold has around 3,000 suppliers, with Arrabawn having 1,000.

Most defections relate to disputes over fixed supply contracts and related bonuses, rather than milk price competition. Dairygold, Arrabawn, Lakelands, Kerry and Aurivo all plan to retain current prices for the peak supply weeks. Dairygold is at around 30c per litre versus 32cpl for Arrabawn.

Some defections followed the IFA getting clarification that farmers who switch can still access the State’s three-year phased superlevy repayment scheme.

“Modest milk supplier transfer between processors is expected as the industry settles into the post quota environment,” said a Dairygold spokesperson. “Over 97% of Dairygold milk suppliers have signed the Society’s Milk Supply Agreement, first introduced in 2013.

“Some of the unsigned milk suppliers have spoken of transferring their milk to other processors, and some have done so. Suppliers who do not sign the MSA forego the bonus payments accruing to contracted milk.”

Dairygold’s milk supplies are expanding in line with forecasts. Weekly volumes are almost 14% up on 2014, driven by a mix of existing supplier expansion, new entrants and supply transfers.

One of the 12 Kilcorney farmers now supplying Arrabawn said at least two other groups of Cork farmers will defect in the coming weeks: “If they had paid the bonus, we wouldn’t be having this discussion.”

“I am sitting here waiting for the milk lorry,” he said. “Unless they pay me my bonus in the next five minutes, there’s no going back.”

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