Was the change to your reward scheme linking end of year payments to trading discussed at the relevant ‘area’ meetings?

The Loyalty Reward Scheme Update was a full agenda item for both the general and the combined regional committee meetings in November and the annual Aaea meetings in November/December, which all members are invited to.

In hindsight, there was a very busy agenda at those meetings from the Milk Supplier Census to the new Grassroot Bonus and reviews of the different businesses over the year. In future we will allocate more time to debate changes of this nature at these meetings.

When it became apparent that there were concerns over the change which links potential year-end milk payments to the level of purchases, we made significant efforts to reengage with members.

There is a view that your proposal to link trading with end of year milk payments is designed to lift the Agri Business trading volumes without becoming more competitive.

The everyday goal of the society is to maximise members’ income.

That is written into our strategy, it is the guiding principle of our business model and is the core focus of the board and management team.

The same applies to our agri business. When a farmer trades with us, their support helps to build a stronger agri business, which in turn delivers greater competitiveness.

This has a cascading positive impact across the business overall which we feel should be rewarded.

The Loyalty Bonus Scheme has been in operation since 2015 and has paid out €21.1 million to reward those who trade with us.

The updated scheme would increase the level of payout. I think that the scheme has broad support but the element linking it to milk price is being challenged.

Is Dairygold cost competitive on feed and fertiliser?

In our catchment area there is very strong competition for farm inputs, but we are confident that our overall package of quality, price, credit and advisory services is very competitive and through the support of our customers has allowed Dairygold to build a strong market share which has been growing in recent years.

Farmers will soon be purchasing feed and fertiliser for 2025, where is the proposal to update your reward scheme now?

Over the last three weeks Dairygold has sought the opinion of members who attended Dairygold’s focus groups and engaged with a wide range of other members. Earlier, this week the board and management met the Dairygold regional committee members across six Dairygold regions, as part of our monthly engagement process. The feedback from all of these engagements will be considered by the board at a meeting this week, with a view to deciding next steps and communicating that position.

What is the requirement for area committee members and directors to trade with the Co-Op?

It’s 25% of trading on entry to the committee, 50% in year one and 75% thereafter which was amended recently following consultation with members.

How can individual suppliers or shareholders raise a grievance with the Co-op?

As a co-operative society, Dairygold has a very strong representative structure that allows all members to make representations directly to their committee representatives or to the board member in their area.

They can also raise it with their milk adviser and or their area sales manager and branch managers who farmers would be in regular contact with.

They can also contact the member relations manager or Dairygold’s office directly.

There are a wide variety of options.

As a member oriented society, we are open to engaging with every member.

There is a lot of speculation around over spending on recent capital expenditure – is it correct? What has been spent on cap ex in 2024? What’s planned for 2025?

In 2024 there was c.€30 million invested in dairy operations. That was related to numerous initiatives including regulatory, business continuity, margin enhancing and three essential projects – the milk intake and the finished product lab in Clonmel Road and the Casein Plant in Castlefarm, which was forty years old and needed replacement for business continuity but it will also enhance our product mix, by increasing the Casein varieties produced. These three projects will cost €60m in total, with the payments being spread predominantly over 2023, 2024 and 2025.

Further Dairygold investment in new processing plants, is no longer required and there is no such capital investment planned for 2025. However, ongoing investment in operational maintenance, plus investment in sustainability initiatives, will be critical going forward.

There have been concerns expressed about banking repayments, interest payments and working capital. Can you clarify any of those issues? Are you confident that repayment capacity and loan structure remains on a solid track despite falling DG milk supplies?

Dairygold’s net bank debt at c. €150m, remains at a very manageable level, within our banking covenants and is supported by a strong bank syndicate. Dairygold has no concern with regard to banking position and current milk volumes. There were 10 interest rate increases over 2022 and 2023 increasing the cost of financing significantly. Dairygold’s interest costs increased in 2023 and 2024 and should reduce in 2025 as interest rates decrease.

Working capital fluctuations are directly related to dairy market prices. The business model requires significant working capital, as milk is paid for on the 22nd day of the month following delivery, while stock and debtor days are significantly longer.

The society also supports members by offering extended credit terms for trading with the society.

Dairygold has a strong balance sheet, which provides the flexibility to continue to invest in higher margin activities.

Demineralised whey prices obviously held back revenues generated by the co-op in 2024 – what plans have management to change this for 2025?

Dairygold has continually been a consistently strong performer in the Milk Price League, but returns in 2024 from our de-mineralised whey, which has been a top performing product for many years, have been challenged.

The board continues to ensure that the best possible milk and grain prices are paid to its suppliers throughout the year, and in November 2024 we initiated a wide-ranging Cost and Business Optimisation review of the Dairygold business to ensure that the Dairygold business is operating efficiently and will be in a position to maximise the milk price to milk suppliers.

This review is currently ongoing, with recommendations being presented to the board in March.