A third meeting in quick succession between the negotiating arm of Kerry Group PLC and the sub group of Kerry Co-op is to take place early next week with sources close to the deal suggesting good progress is being made. It is likely a further Kerry Co-op meeting will be required to subsequently ratify any deal.

We understand that one strong option is that a sum of money in the region of 3c/l to 4 c/l on one year’s milk supply is being discussed as the top-up to end the ongoing dispute between Kerry Co-op and Kerry Group.

For the typical Kerry supplier, this works out at €150 to €200/cow or €12,000 to €16,000 per farm for those farmers with 80 cows. In recent weeks, Kerry Group has stated that no “top-up” payment is required.

Neither party in the discussions has confirmed this 3c/l to 4c/l figure. However, sources close to the deal say that an announcement on Monday next week, which could lead to an agreed template or the start of a process to establishing the exact figure.

As part of the negotiation, our understanding is that Kerry Group has suggested it won’t be involved in milk processing into the future if an agreement is not made on this issue very soon.

The nub of the issue here is that it was not clearly explained to farmers how the Kerry “leading” milk price was to be calculated.

Agreed templates between Kerry Co-op and Kerry Group have not been shared with farmers, and the process of establishing price should have been explained better at the time when public statements were made.

Subsequently, an arbitrator was engaged to mediate between the parties and the arbitrator ruled that the onus was on Kerry Group to justify and explain with proof the differences between west Cork and the Kerry price.

In all Irish milk processors, this level of detail isolating differences in product mix or any subsidisation from other investments is not detailed.

Figure 1 shows the difference in base milk price reported from the Irish Farmers Journal monthly milk leagues from 2015 to 2019 inclusive excluding top-ups already paid.

There have been a number of top-ups to these Kerry prices already with a hardship payment of 0.6c/l in 2016, a 0.8c/l top-up for 2017 and in 2018 a number of top-ups equivalent to about 0.56c/l over weighted seasonal production.

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‘Very constructive’ talks on Kerry milk price continue

'Constructive' meeting between Kerry Group and co-op on price dispute