I hear rumblings of discontent from suppliers to the West Cork co-ops because of how much more they paid for fertilizer this spring than suppliers to Dairygold and other Cork co-ops.

Dairygold suppliers were able to buy their CAN and other fertilizers €20 to €25 per tonne cheaper – and got three months’ credit.

Co-op boss Jim Woulfe and his agri trading manager Sean O’Sullivan took a chance late last September and forward-bought about 110,000 tonnes of fertilizer, committing some €18m to the deal.

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CAN was then offered to suppliers in January and early February at about €252 per tonne, with payment not required until May or June. That lengthy credit is worth about €4 per tonne. There was a further discount of €5 per tonne if the supplier bought the same tonnage as last year.

Dairygold included North Cork Co-op and Boherbue in the deal. Finally, alert to what was happening, McDonnells in Fermoy pulled out the stops and was able to compete on price for some customers, although not on credit terms.

The sweet thing for Dairygold was that as well as giving its suppliers fertilizer at a keen price, it made a reasonable margin. The CAN fertilizer was brought in through Target Fertilizers at a wholesale price of around €208 per tonne from the continent. Subsequent costs would be €7 for shipping, €3 for port handling; €4 for bagging; €4 for pallets and €10 for delivery direct to farms. That left up to €14 per tonne to be divided between Dairygold and Target as margin.

Dairygold suppliers should get a share of this back as a trading bonus for 2014. Last year, they got a loyalty bonus of €7 per tonne of feed bought and €5 per tonne of fertilizer, although last year was exceptional.

In contrast, the West Cork co-ops held off buying until December, by which time wholesale prices had risen. Their milk suppliers therefore ended up paying around €275 on credit terms that have been tightened up over the past 12 months.

Suppliers expecting to get trading bonuses in 2014 have to buy this fertilizer, dearer or not.

The West Cork co-ops are tightening up on the bonus conditions. In the case of Drinagh, suppliers must purchase inputs this year to the tune of 7c per litre if they are to get 100% of the co-op’s bonus on last year’s milk and trading. That’s up from 5c per litre.

Meanwhile, CAN is now trading generally at €300 to €325 per tonne.