Suppliers to Pilgrim’s Europe, formerly known as Moy Park, are weighing up new supply contracts which have been offered by the poultry processor.

Reports suggest that the majority of Pilgrim’s suppliers in NI have returned signed contracts, with the remainder still considering the contents of the new offering.

The new contracts come with a price increase for poultry producers, but this is not available for those that stay on their existing contract.

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It is understood that one of the biggest changes is that the new offering is effectively a 24-month rolling contract, so a supplier is required to give two years notice before leaving.

In the past, suppliers had to give a two-crop notice, which equates to around four months, although a temporary requirement for a 12-month notice was brought in more recently.

Views

There appears to be a very wide range of views among Pilgrim’s suppliers about the new contracts.

At one end, there are many producers who have no qualms with signing the new contracts and are keen to receive the price increase immediately.

These producers point out that their current poultry system suits their farm and lifestyle well, they have had no issues with Moy Park in the past, and they have no desire to change. At the other end, there are producers who are wary of a long notice period and are not ruling out switching to the likes of table egg production at some point in the future.

Others are frustrated that the pay increase is only available to those who are willing to sign up to the new arrangement with little or no room for negotiation.

Some have raised concerns about other aspects of the contracts, including tighter requirements for turning around empty sheds between bird crops, or the ability for contracts to be terminated by Pilgrim’s at short notice under certain circumstances.

Clarification

In recent weeks, Pilgrim’s has clarified various aspects of the new contracts since they were first sent to suppliers.

This includes confirming what pricing mechanism will be used for applying a further price increase which is scheduled for next year.

A common concern initially surrounded a clause in the contract which stated that no other livestock were permitted within one mile of poultry sheds.

Pilgrim’s have since clarified that this was an error and there is no expectation that this clause will be enforced.

Caution

The Ulster Farmers’ Union (UFU) has been urging poultry producers to “exercise extreme caution” when reviewing the contracts before signing.

The UFU has consulted legal experts on the new contracts and has circulated their advice on several aspects of the contracts among its members.

However, the UFU has also encouraged poultry producers to get their own independent legal guidance, and the union is clear that it cannot advise members on whether to sign contracts or not.