Tirlán suppliers in fixed milk price schemes have a contractual right to mediation and arbitration, a suppliers meeting was told last Thursday.

Individual mediation with four selected farmers, who will be assisted by the Irish Farmers' Association (IFA), will commence soon. The IFA’s legal counsel James Staines said the contracts were less than watertight.

The meeting, chaired by IFA president Tim Cullinan, gathered over 100 Tirlán suppliers with significant exposure to fixed milk price schemes together for the first time in a semi-public setting.

Over three hours, farmers shared their personal stories, with some people having the vast majority of their milk fixed.

Milk was fixed at 31c to 32c/l, 25c below the current base price, and, crucially, well below 2022 production costs of around 40c/l. Much of this milk is still committed at lower prices for 2023.

Engagement

Tirlán strongly refutes any suggestion that it has not been in constant engagement with farmers who are seriously affected by fixed milk price schemes.

In the first decade of fixed milk price operation up to the end of 2020, Tirlán says that farmers “beat” the market milk price by €30m.

Although the primary focus of the fixed milk price schemes was price certainty and stability, farmers gained.

The evolution of the schemes, from “fixed margin” (linked to input prices) to “fixed price” and where a market adjuster, which limited the gap that could open between fixed milk price and market price, was removed, was in response to farmers wanting the schemes simplified.

Cap on volumes

A cap on volumes was considered, but farmers weren’t in favour of it.

At all times, farmers were responsible for their own level of involvement in fixed milk price schemes, it said.

In relation to the 17th iteration of the scheme, FM17, only one farmer made contact at the time the allocations were announced, Tirlán said, unhappy with how much milk he had received and his concerns were addressed then.

Tirlán said that in 2022, 13% of milk is in fixed price schemes, not 25% as had been stated at last Thursday’s meeting. That figure will drop to 5% for 2023, as a number of schemes end.

Support

The co-op said it has committed €22m in support for this year for farmers. The input support scheme will put 4.5c/l (VAT included) on top of all base milk prices.

It will continue for the first six months of 2022 and will be set at 6.5c/l for January to March 2023.

The extended credit scheme is an interest-free loan to be repaid in 2025 and 2026.

The fixed milk price support scheme is for suppliers with over 35% of milk committed.

It increases the price for 2022 for milk entered into this scheme to 40c/l, but locks in that milk at 38c for 2023 and 2024.

Farmers can still apply for this, but most at the meeting in Carlow refused this option, viewing it as a further liability on their business over the next two years.

Tirlán says a supplier with 80% of their milk fixed who availed of all these supports will have an average base price of 43.13c/l this year, above breakeven, with 46.34c/l the average for someone with 40% of their milk fixed.