Co-op drops milk supplier penalty after protests

Food giant Dairygold has dropped a controversial penalty clause from its new milk supply contract.

The co-op announced a bonus payment scheme and a feed subsidy yesterday in a bid to encourage more farmers to sign its new milk supply agreement (MSA).

The moves came days after about 70 dairy farmers who supply milk to Dairygold protested at the co-op’s plant in Mitchelstown, Co Cork.

They had urged other suppliers not to sign the MSAs and to hold out for a better deal.

However, a Dairygold spokesman said board members met on Friday and considered several issues raised by farmers during its consultation process on the new contracts, which began in October.

“The board has decided to drop the 2c per litre penalty on suppliers who do not sign the MSA by Mar 31, 2013,” he said.

“In recognition of a strong financial performance for 2012 and the importance of the completion of the MSA for the implementation of the strategy [the co-op’s post-quota milk expansion strategy], the board has decided to pay a bonus of 0.35c per litre on all milk supplied in 2012.

“This bonus will be paid to each milk supplier once they have signed their MSA and completed their milk supply forecast and returned them by Mar 31, 2013.”

The spokesman said the MSA and milk forecast underpin the co-op’s expansion plans — they will give the co-op clarity on proj-ected milk supply to justify corresponding investment in processing capacity.

He said the board also recognised that 2012 was a very difficult and costly year for farmers, and it has decided to pay a feed-related subsidy of €5 per tonne on all ruminant feed purchased from the society in 2012. It will be paid via supplier accounts this month.

The IFA welcomed Dairygold’s moves and urged farmers to engage with one-to-one meetings organised by the co-op.

National dairy committee chairman Kevin Kiersey said: “I think Dairygold deserve credit for listening to us and to their suppliers, and for adopting a much more positive approach which is fairer to farmers.”

Dairygold said about 30% of its almost 3,000 suppliers have signed the new contracts, as it urged others to sign up. “Suppliers have nothing to fear, even though the agreement may appear legalistic in its terminology, there is no entrapment in completing it, so I would encourage everyone to sign the agreement and complete their forecast as requested,” said the spokesman.

* Suppliers should call 1890 200840 to schedule a one-to-one meeting.