Co-ops Must Renew Commitment to Milk Suppliers Ahead of Quota Removal

IFA National Dairy Committee Chairman Sean O’Leary has said that, as we enter the last two months of the quota regime, farmers are understandably and legitimately keen to explore their options to switch milk purchaser to secure the best deal for their family business. He said this meant that to preserve the competitiveness of the sector, co-ops must persuasively renew their commitment to suppliers that they will do whatever it to improve efficiencies and secure the best long term milk price and value for their business.

“We are hearing a great deal at the moment about groups of farmers seeking to speak to alternative milk purchasers, or being sought out by them. This is a perfectly understandable dynamic as milk quotas come to an end and farmers seek to secure the best possible long term outcome for their family business,” Mr O’Leary said.

“We in IFA have a very clear view on this matter: farmers are at absolute liberty to move from one milk purchaser to the next, and co-ops cannot take their suppliers for granted,” he said.

“We also take the view that co-ops owe it to their members to do whatever it takes to deliver the best milk price and long term value for their business. While this can be done by improving efficiencies through consolidation and co-operative investment, it should not exclude the possibility to negotiate fair and balanced merger/consolidation terms with other co-ops to deliver for farmers,” he said.

“From a farmer view point, it is absolutely essential to consider all relevant issues before jumping ship: a grudge or peer pressure cannot be the deciding factor. Milk price performance and commitment, co-op investment and marketing plans, supply conditions (as per newly introduced Milk Supply Agreements), input costs, merchant credit terms, support in other areas (such as advisory, or preparation for the new Bord Bia quality assurance audits), should all be taken into account, and compared with what the potential new milk purchaser has to offer,” he said.

“The danger of farmers leaving their co-ops is that it splinters milk pools and can damage the competitiveness of our industry, to the ultimate detriment of all milk producers. However, the onus is firmly on co-ops to ensure their suppliers are reassured,” he concluded.