Kerry farmers win milk price arbitration battle

Kerry milk suppliers are celebrating news that a bonus payment is on the way.

The arbitrator in the dispute over bonus payments by Kerry Group plc to its milk suppliers has issued his report, and it seems the co-op has won the day on the main price determinant - whether the west Cork co-ops should be included as a comparison on milk price or not.

The long-drawn-out saga has reached an end point of a sort, with the arbitrator sending his findings to both sides.

This comes almost a year after the oral hearings heard arguments from Kerry Co-op, Kerry Group plc and expert opinion on behalf of both sides.

Payments

A spokesman for Kerry Co-op said the board will now meet with Kerry Group plc to determine how to agree bonus payments in light of the arbitrator's findings.

A spokesperson for Kerry Group plc confirmed the company had received the arbitrator's report, which is 95 pages in length, and would be taking the time to review the report in detail before making any decisions on how the company would proceed.

While the arbitrator was considering 2015 only, his finding does potentially have implications for some years previous to that, and indeed for the years since.

Backdrop

A row over whether then-Kerry CEO Stan McCarthy gave a public commitment to pay "a leading milk price" or "the leading milk price" back in 2013 has been cited as the main focus of this argument over bonus payments.

Actually, it was a different matter entirely that became the pivotal issue.

Essentially, the arbitrator centred his assessment around whether the four west Cork co-ops should be included as comparators for milk prices.

Kerry Group plc argued that in order to be comparable, a co-op would have to both assemble and process milk.

It further argued that the west Cork co-ops of Bandon, Barryroe, Drinagh and Lisavaird do not themselves process milk – a function that is fulfilled by Carbery on their behalf.

However, the arbitrator has found in favour of Kerry Co-op and that the four west Cork co-ops should be included in the calculation of milk price. In the annual Irish Farmers Journal/KPMG milk league the the West Cork co-ops regularly occupy the top four places and are often 3c to 4c/litre ahead of all other co-op milk prices.