West Cork co-ops Drinagh, Lisavaird, Bandon and Barryroe, which process milk collectively at Ballineen under the Carbery banner, have decided not to participate in this year’s KPMG/Irish Farmers Journal annual milk price review.
The annual milk price exercise establishes the manufacturing milk price as reviewed and verified by KPMG.
It is the only exercise that allows a third party to review milk price comparing like with like.
The exercise was started back in 1988 as the Craig Gardner/Irish Farmers Journal milk price audit to compare payouts to milk suppliers.
The exercise has evolved and developed into a more holistic review, recognising the payout alongside the co-op investments, required shareholding and balance sheet requirements of a dairy business.
For the last 33 years it has been published once per year to show milk price paid out, allowing dairy farmers compare, like for like, with what was paid out the previous year.
Farmers decide to leave
Last year, Arrabawn and Aurivo decided to pull out of the annual exercise as they wanted the money they pay out to liquid milk producers included in the manufacturing milk price established by KPMG.
This year the four west Cork co-ops have decided to pull out as they want the trading bonuses paid out to be included in the annual exercise.
Last autumn, an expert review team was established to oversee the rules of the exercise as there were questions from processors
The west Cork co-ops pay out a trading bonus which varies from year to year depending on the level of trading (feed, farm equipment, groceries etc) milk suppliers make with the co-op.
The end of year bonus normally ranges from between 0.5 to 1.0c/litre.
Last autumn, an expert review team was established to oversee the rules of the exercise as there were questions from processors.
These questions were primarily on three issues – liquid milk inclusion, publishing the milk prices in euro per kilo milk solids and the inclusion of trading bonuses.
The expert review panel includes former UCC lecturer Michael Keane, current UCD lecturer Professor Michael Wallace and dairy farmer and deputy president of the IFA Brian Rushe.
The review committee met for the first time in December 2020 and in February 2020 issued a report to all processors.
The four west Cork co-ops have now also decided not to take part
The report suggested liquid milk should not be included in the manufacturing milk price exercise and that trading bonuses should not be included in the milk price establishment.
It also advised that the results should be published in euro per kilo milk solids as well as cent per litre during a transition period.
Following this communication to the co-ops, Arrabawn and Aurivo co-ops said they would not take part again this year as liquid milk money is not included.
The four west Cork co-ops have now also decided not to take part as they want the trading bonuses paid out to suppliers to be included.
The annual exercise works on the principle that a definition is created to allow fair comparison between co-ops. Any bending of the rules or different interpretation of the definition will only lead to unfair comparisons.
The expert review committee made it clear that it is up to each co-op to decide how they reward farmers. In principle they have nothing against trading bonuses or liquid milk premiums, but the exercise must be fair and transparent.
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