Dairy farmers face long waits to switch processor

Some suppliers hoping to take advantage of demand tied to two-year notice period

An aging farmer population, succession challenges, environmental restrictions and high costs could set the scene for a ramp-up in competition for milk supplies between co-ops.

Fears of a fall in milk supplies on the back of the varied challenges facing the sector are said to be a growing concern for dairy processors, who have invested around €1.6bn since 2015 to handle additional milk produced by Irish farmers.

However, many farmers wishing to take advantage of the demand for milk and obtain better conditions from another processor could find themselves tied to a protracted notice period.

Dairy farmers looking to switch processors may have to give notice of over two years to their current co-op.

A 2015 protocol, signed by all Irish Co-operative Society (ICOS) member co-ops, agrees to apply a 90-day notice period before starting milk collection from transferring suppliers.

However, it only applies to a minority of dairy farmers who are without a milk supply agreement or a contract.

Tirlán confirmed to the Farming Independent that dairy farmer suppliers need to give two years’ notice. In a statement, it said it continues to welcome new milk supply entrants.

“New entrants are important for generational renewal in order to ensure a vibrant co-op and dairy sector. Over the period from 2020 to 2022, Tirlán welcomed 168 new entrants to milk supply.”

Notice

Tirlán requires its milk suppliers to enter into a Milk Supply Agreement (MSA), which sets out the terms of supply. This MSA is a five year agreement and if a supplier wants to supply another processor, they have to provide two years’ written notice.

Dairygold confirmed that supplier members must give two years’ notice, effective from December 31. It also said it has had a number of new entrants each year. Lakeland Dairies said it is open to new entrants, while suppliers looking to leave are required to give at least one year’s notice, effective from December 31.

Tipperary co-op confirmed it has a 12-month notice period from each November. It also said numbers joining as new entrants have not been restricted and it will have new entrants this year.

Drinagh confirmed that a shareholder must have ceased trading with the Society or supplying farm produce for two years before the board will consider an application to redeem their shares.

Its MSA is for three years, but by mutual written consent, the MSA can be terminated, in which case the ICOS Orderly Transfer of Milk Protocol applies.

Aurivo said it is “very much open to new entrants” and has “strong interest” from new entrants in 2024.

However, it declined “for competitive, sensitive” reasons to give details of the notice period its suppliers must give, but said “contractual commitments are explained to individual Aurivo suppliers as requested”.

Strathroy recently sent proposed contracts to its suppliers, with the Northern processor due to hold meetings in the coming weeks to engage with its supplier base on the matter.

Cormac Cunningham, who runs Strathroy with his brother Ruairí, confirmed it has no contracts in place with suppliers at the moment, but is introducing them.

Contracts

He said under the proposed contracts, a 12-month notice period would be required of suppliers looking to leave, with a window to notify the processor in January or July.

He said this may change after the processor holds meetings with its suppliers in the coming weeks.

He also said Strathroy is open to new suppliers.

Kerry, Arrabawn, Bandon, Barryroe, Boherbue, Lisavaird and North Cork did not respond when asked for details.