2 co-ops withdraw from 2019 KPMG annual milk price review

Two Irish cooperatives Arrabawn and Aurivo have confirmed that they have withdrawn from the KPMG annual milk price review for 2019.

Both co-ops have cited the continued exclusion of liquid milk premiums from the review for their decisions to leave the process.

Arrabawn

Chairman of Arrabawn, Edward Carr, called for criteria within the annual milk price review process to be changed “in the interest of transparency”.

In a letter sent to the co-op’s 1,000 suppliers, Carr said that the board of Arrabawn had unanimously taken the decision not to participate in the programme this year because of the “continued exclusion of [a] liquid milk premium”.

Carr said that excluding liquid milk from the review “discriminates against Arrabawn and its suppliers as it fails to reflect the true price paid by Arrabawn”.

“It is all the more inequitable when set against the fact that other winter premia/bonuses are included,” he said, adding that it is “not in keeping with best international practice”.

The co-op, he said, had no issue whatsoever with KPMG, which conducts the review, but the system set for it.

Continuing, he added that Arrabawn would look forward to reengaging with the programme “once the criteria deliver fairness and transparency”.

“In short, our proposal is that the calculation [should be] a simple and fully transparent process; divide the total amount paid to farmers in a year by the litres supplied. To do otherwise discriminates against liquid milk,” Carr contended.

Aurivo stance

Meanwhile, Donal Tierney, chief executive of Aurivo, said: “We will not be participating in the 2019 Milk Price Review. The decision was taken uniformly by both the board and management of Aurivo.

This is the correct decision for the co-op given what we firmly believe is the flawed nature of a ‘manufacturing milk’ league table that excludes fresh milk sold for domestic consumption.

“The suggestion of including a secondary ‘composite milk table’ comprised of perhaps just three liquid milk processors in addition to a table exclusively for ‘manufacturing milk’ is not acceptable to us.

“As one of Ireland’s leading liquid milk suppliers, both this suggestion and the league table as it currently stands puts Aurivo at an extreme disadvantage.

“We believe that there should be one league table and that ‘liquid milk’ be included in the calculations.

All milk is liquid. It is simply not equitable to exclude fresh milk sold for domestic consumption.

“European benchmarks for assessing milk price – for example, the LTO International Milk Price Comparison – include 100% of the milk produced. We fail to see why the Irish comparison does not.

“What’s more, other processors are permitted to include the premia they pay to encourage ‘manufacturing milk’ over the autumn/winter months, so why not include the premia paid on ‘liquid milk’?”

He added: “We’re questioning how can it be fair to allow processors to include milk and cream that, for example, is processed into UHT cartons or cream liqueurs in their calculations but, at the same time, insist that milk sold as fresh [liquid] milk is excluded?

“We have no issue with how the table is reviewed by KPMG; our issue is around the exclusion of liquid milk.

“We will certainly consider participating in the future KPMG [annual] milk price reviews, if the methodology changes to show a fair and accurate reflection of the market,” the Aurivo CEO concluded.

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