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Kerry has written to all its milk suppliers to give notice that it is terminating their existing milk contracts.
The contract is at the centre of the row over the leading milk price.
The notice states the current contract will terminate on 30 April 2026. Either party is required to give five years’ notice if the contract is to be terminated.
The letter from Kerry Agribusiness boss Pat Murphy to all suppliers suggests that Kerry will start new negotiations with milk suppliers and the co-op board.
The letter leaves the door open to bringing in terms of a new deal before 2026, if a deal is done.
Last week, in the April edition of the Kerry Agribusiness newsletter, there was an update from Kerry Group summarising its position on the leading milk price row. It said Kerry Group had paid the leading milk price since 2015 on a like-for-like basis and no further money was due.
On Thursday evening the east Limerick advisory committee of the co-op heard from co-op chair Mundy Hayes and co-op CEO Thomas Hunter McGowan.
Arbitration
After listening to concerns of suppliers, the chair said they would go back to arbitration on the leading milk price.
On Friday, the co-op released a public statement: “While the response and approach of the plc is yet again very disappointing, the co-op is very focused on meeting the essential requirements of our members, those being the payment of outstanding monies up to 2020 and the payment of a top milk price into the future.
“Having assiduously explored all and every avenue with Kerry Group, the co-op is left with no other choice but to revert back to the arbitration process where Kerry Group needs to finally honour its commitments under the milk supply contract and bring this matter to a conclusion.”
Also on the Thursday evening online meeting, Thomas Hunter McGowan discussed other investments that the co-op is considering around new detergents for washing milking parlours and tablets for slurry to improve efficacy and the environment.
Signatures are still being gathered from suppliers to requisition a special general meeting (SGM) of the co-op board. The proposed motion of the SGM essentially limits what the co-op board can sanction on investment without a vote of shareholders.
So now it looks like arbitration talks on the leading milk price will be ongoing alongside discussions on the terms of a new milk contract. The plc will not want any reference to leading milk price in the new contract. The milk suppliers will want price included, a commitment on future capacity, growth milk, and milk pick up.
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