Termination notices lodged as Dairygold spat deepens

A number of farmers have issued milk supply termination notices to Dairygold amid a growing row over changes to the co-op’s loyalty reward scheme.

Dissatisfaction with the changed scheme was outlined in a letter circulated to Dairygold suppliers over the last week, which urged farmers to lodge termination notices with the co-op in protest at the move.

The letter claimed that the new loyalty reward scheme would effectively force Dairygold farmers to purchase a greater proportion of their inputs from the co-op in order to qualify for all possible bonus payments on milk supplied.

Dairygold announced late last year (2024) that any future milk price top-ups, year-end bonuses or feed rebates would only be paid in full to those suppliers who made purchases with the co-op that exceeded 6c/l in 2025.

Suppliers who spent less than 6c/l with the co-op would only receive 50% of the top-ups.

Disaffected suppliers

The disaffected suppliers claimed that these changes were “an attempt to prop up an underperforming and inefficient agri-trading division”.

In a communication to committee members which was issued this week in response to the letter, Dairygold management admitted that termination notices had already been lodged with the co-op.

“While the majority of Dairygold members have reacted positively to the proposed changes [to the loyalty reward scheme], we are aware of concerns expressed by a number of milk suppliers,” the Dairygold communication stated.

“The society has also received milk supplier agreement termination notices from a number of members of purchasing groups and it is our intention to engage with these milk suppliers directly over the coming days,” it added.

The Dairygold communication hit back at criticism of the co-op’s agri-trading division and defended the changes announced to the loyalty scheme.

The co-op claimed there was no link between the scheme payment and core milk price. It pointed out that the link was with top-up payments, which were described as “occasional” and “not guaranteed”.

“In the event that the [Dairygold] board decides to issue a year-end milk price top-up, for 2025 milk supply onwards, all milk suppliers will be eligible for a minimum of 50% of any such payment, regardless of their level of trade with the co-op,” the Dairygold communication explained.

Level of trade

“A milk supplier who has a level of trade in excess of 6c/l will receive the full payment, to reward their loyalty,” it added.

“The 6c/l threshold was devised based on a current estimate of milk production costs. There is no plan to increase this threshold,” it added.

“Milk suppliers who trade with Dairygold’s agri business help contribute to the society’s overall business performance, which in turn helps to pay a competitive milk price and should be rewarded,” the management communication insisted.

However, this view is not shared by all Dairygold suppliers.

“The two sides of the co-op - milk processing and input supply - should operate independently. The trading side must remain competitive,” the letter from disgruntled suppliers stated.

“Farmers need to be able to run their business efficiently and can only do this if they have the freedom to shop around for the best value and quality when it comes to purchasing their inputs.

"Linking the milk price to input purchases compromises this freedom and undermines their ability to run their businesses effectively and profitably,” it added.