Farmers who supply Town of Monaghan co-op will now be paid on the 25th of the month as opposed to the 12th of each month.

The move affects all farmers, both liquid and manufacturing, in Northern Ireland as well as the Republic and will come into effect from 25 January 2015.

Speaking to the Irish Farmers Journal on Wednesday, the new Town of Monaghan chief executive Gabriel D’Arcy confirmed that the change is being implemented to give the co-op “better sight” of global market prices.

“Traditionally, we would have had our board meeting in the first week of the month when we would have visibility of the first GDT auction, if we were lucky. Then we had to make a decision on the back of that,” D’Arcy explained.

“This is being done to enable Town of Monaghan to make a better decision regarding the sale of our core products, which will hopefully deliver ultimately for our suppliers. We will have greater negotiation powers with customers as a result of this,” he added.

This is the first major decision made under the D’Arcy stewardship since he assumed office on 1 November. It emerged in July that D’Arcy would leave his position as managing director with Bord na Móna and take over from Vincent Gilhawley as Monaghan CEO.

D’Arcy admits that such a payment had been discussed at board level before. However, it would appear that D’Arcy’s arrival has fast-tracked the change.

“I come from a very market-orientated position. Our board is very product-orientated, as is only right, but I think we all need to look at the market more,” D’Arcy said before adding that is “one of a series” of changes which will be implemented by the co-op.

Concerns have been raised by some farmers over cashflow issues coming from the change. Farmers will now be paid 12 days later, which could affect many regarding direct debits and other payments. D’Arcy said the co-op will be making a loan-type payment to farmers to ease the transition.

Will farmers lose out?

Town of Monaghan has made it clear that the change in its payment system from January 2015 is about delivering for its suppliers and maximising the value of its products, but is there more to the figures?

With an overall milk pool of 450m litres (60 million in the south) at a milk price of 30c/l, the interest cost for every 1% interest paid for the extra 13 days would be worth €50,000 to Town of Monaghan over the year.

But if all farmers had an overdraft at 6%, the costs to them would be €300,000 for the year.