'No clauses' on €50m leading milk price deal

There are no conditions linked to the €50m leading milk price lump sum to be paid to Kerry suppliers if the buyout vote next week is successful, the chair of Kerry Co-op James Tangney has confirmed.

“[For] the payment there will be a fund of €50m transferred to Kerry Dairy Ireland and that fund will be paid out to farmers in January.

“It will be paid on solids and it will be paid on the years in question. There will be a percentage to each year, that 5.4c/l will be allotted over those years.

“There is no other stipulation on it, it will be paid in full on the clause 5.1 of the contract. I can guarantee that. There are no other clauses whatsoever,” Tangney said at a shareholder information meeting in Ennis last week.

As part of the deal, 5.4c/l is being offered to settle the leading milk price dispute, paid out on average annual solids from 2015 to 2020 on contracted milk.

In April 2021, Kerry Group gave notice to all suppliers that it was terminating its current milk supply contracts as of April 2026.

A portion of Kerry suppliers, thought to be around 300, have indicated they will not sign another contract of this nature and will instead join the Munster Dairy Producers Organisation (MDPO).

New contract

At the meeting, Tangney told the room that if the buyout of Kerry Dairy Ireland from Kerry Group by the co-op was successful, a new contract would be issued to suppliers by March or April of next year.

Meanwhile, Simon MacAllister from EY said Kerry Co-op went to the banks for this deal on the basis of 24% less of a milk pool – 0.88bn litres as opposed to its current 1.1bn litres. He added that as part of prudent business planning it “assumed things had not gone to plan”.