A Dairygold milk supplier has expressed grave concerns regarding the co-op’s decision on its fixed milk price (FMP) contracts.
Dairygold recently announced a minimum milk price for 2022 of 38c/l on all supplies. The move effectively gave a top-up of 6.25c/l on milk supplied under FMP5 and 5.75c/l on milk supplied under FMP6. This will be paid on all milk delivered under the schemes this year.
The co-op said the move ensured that all FMP milk supplied in 2022 generated a margin.
However, Dairygold milk supplier John O’Sullivan claimed the decision by the co-op to amend the FMP agreements set a dangerous precedent and raised “profound” questions for the society.
O’Sullivan questioned the morality of the decision to alter legal agreements. Moreover, he asked why the decision was taken, who stood to benefit from the move and how it will be financed.
The Coachford, Co Cork, milk supplier pointed out that nobody put pressure on Dairygold farmers to join the FMP schemes. This decision was taken freely by farmers, and therefore they had to live with the consequences, he said.
“If you put your signature to something, then that agreement is law and it cannot be put through the shredder as Dairygold has done,” O’Sullivan maintained.
“How can anyone trust Dairygold anymore if they are prepared to shred legal agreements,” he asked.
“The lack of morality around this is just unbelievable,” he said.
O’Sullivan claimed that he had not received communication from Dairygold regarding the FMP move.
I’m disillusioned and fed up to be honest. The people who will benefit from this are Dairygold’s larger suppliers
He rejected the suggestion that the decision was taken to mitigate financial pressures at farm level, pointing out that suppliers could only include a maximum of 20% of their milk in FMP schemes.
The Coachford farmer claimed that in taking the decision to amend the FMP conditions, Dairygold was, in his view, effectively prioritising the interests of the co-op’s major milk suppliers.
“I’m disillusioned and fed up to be honest. The people who will benefit from this are Dairygold’s larger suppliers,” O’Sullivan contended.
“This move will cost the small guy at the end of the day. It’s a case of robbing the poor to pay the rich,” he believes.
However, Dairygold denied that the improved FMP conditions will be funded through lower variable milk prices to farmers.
The co-op insisted that the increased payments on FMP milk were secured as a result of negotiations with Ornua and other customers.
“Dairygold took prudent action in negotiating a better offer than Ornua had initially tabled to achieve the new milk price uplift. The payment has been facilitated through enhanced commercial terms for FMP product only and in no way impacts on variable milk purchasing,” the co-op stated.
“Through a combination of an enhanced offer from Ornua and better market returns achieved from secondary ingredients specifically produced from FMP milk, Dairygold was in a position to establish a minimum quoted milk price of 38c/l for all milk supplied to the society in 2022,” the processor added.