Dear members of Aurivo and Arrabawn,

I write to you to express my concern at the recent decision taken by the board of your co-ops to withdraw from the KPMG/Irish Farmers Journal Manufacturing Milk Price Review. We understand that the decision was taken by your board in relation to concerns raised by management around the validity of the milk price review process.

In light of this, we feel it is essential that we provide you with full details pertaining to the review process and highlight the extent to which the decision taken by your board will reduce transparency within your co-op.

After meeting and communicating with your representatives and management, we understand that both Aurivo’s and Arrabawn’s decisions to withdraw from the review centres on concerns in relation to the procedures of the review process.

In particular a number of points were raised around how other processors engage with KPMG. A view was also expressed that money paid to Aurivo and Arrabawn liquid milk suppliers should be included in the manufacturing milk price review.

Both these items call into question the review procedures. In light of these concerns, we have asked KPMG to clarify exactly the process and the standard adhered to when completing the review process and to inform us of any changes that have taken place.

We quote from their written response: “... KPMG perform the agreed upon procedures, as set out in each engagement letter, on the information provided by the participating milk processors. These agreed upon procedures have been consistent for over 15 years and they are performed having regard to International Standard on Related Services 4400, Engagements to perform agreed-upon procedures regarding financial information, published by the International Auditing and Assurance Standards Board which is industry best practice.”

On the liquid milk issue, after months of consideration and in advance of your recent board meetings, we had offered to address this by creating an “all-milk” table that would include both payments to liquid and manufacturing suppliers. This table would be created in addition to the manufacturing milk price.

We remain open to considering other developments to ensure data and information presented to farmers is fair and factual. This is one of the fundamental reasons we engage the services of an internationally accredited firm such as KPMG to compile the information.

We would challenge the decision that a co-op board representing the interests of farmers would, in a year when your businesses have seen shareholder value written off the balance sheets, operating profits under pressure, and many significant new investments unveiled, decide to reduce milk price transparency to farmers.

The KPMG/Irish Farmers Journal milk price review does not belong to either party. It belongs to the dairy farmers of Ireland and is designed to give added transparency in relation to milk price and the performance of your co-op.

It is the simplicity and transparency of this figure that makes the process so valuable to farmers. Both KPMG and the Irish Farmers Journal are committed to protecting the transparency and integrity of the manufacturing milk price table through safeguarding the principle on which it was founded – the total money paid out to manufacturing milk suppliers divided by the quantity of manufacturing milk delivered to each processor.

We would urge both dairy farmers and indeed farm organisations to make their views clear on the positions taken by the boards of Aurivo and Arrabawn.

We would encourage the co-op boards to reconsider their position to ensure farmers maintain the milk price transparency that has delivered so much for farmers.

If you would like further information or to discuss any of the above further, please email editor@farmersjournal.ie, or phone Jack Kennedy on 087-908 2651.