The 2021 milk price paid by Kerry Group to suppliers will have to be resolved before any talks on a potential joint venture take place, according to the new chair of Kerry Co-op.
Denis Carroll told a dairy meeting on Wednesday (February 2), organised by Kerry Irish Farmers’ Association (IFA) Dairy chair, Michael O’Dowd, that he has spent the past month on the road listening to issues on the ground.
Many farmers at the meeting outlined their frustration at the milk price paid by Kerry Group and called for outstanding historical issues on the matter to be resolved.
Carroll stated that the relationship between Kerry Co-op and Kerry Group “has evolved to a very poor place” and he will be doing nothing to feed the media “frenzy” on the matter.
“That is our focus, that we try to rebuild the trust and get things moving in a positive direction. I’m a believer that you achieve a lot more from cooperation than confrontation.
“So the litmus test to see if Kerry Group [is] buying into the new approach we’re trying to bring to this, is that we’ll sit down around the table and sort out the issue of the 2021 milk price,” Carroll explained.
“If we can’t go in and resolve a relatively simple problem to come to an agreement on the 2021 milk price, how in the name of god do we think we could set up a joint venture together? That is the challenge I have put to Kerry Group,” he added.
Milk price
In April 2021, talks between the co-op and Kerry Group on a potential deal were suspended after over 18 months of discussions.
Carroll who has supported the joint venture, in principle, since it was proposed by Kerry Group, believes it is “a phenomenal opportunity”.
He disagreed with some farmers at the meeting who felt that Kerry Group would be the only beneficiary from the move:
“I think if we get this right, it may suit everybody, but there’s a mammoth load of issues to be resolved. We will move nice and slowly and figure them out. And we will try to bring back a deal, if we get into the room, that will benefit everybody.
“But we will have nothing to talk about if we can’t resolve the 2021 milk price and on top of that, the price for January,” Carroll warned.
The chairman said that if the co-op went on the journey again they would be working together with Kerry Group, which he said did not happen previously.
Carroll outlined said that a stage would also come in the process where both parties would have to resolve the historical issues around milk prices paid in recent years to suppliers, which is subject to ongoing arbitration.
He stated that a “major trump card” for the co-op in negotiations is that any proposed joint venture will be put to a vote of A and B shareholders for approval.
Carroll said that he favoured a 60/40 split for the joint venture, with the co-op taking the majority stake.
“We will be asking the people who are supplying this new entity with milk to “share up’ and there will be a levy put on their litre of milk,” he outlined.
However, those figures have not been decided upon and will depend on the valuation placed on the dairy business.
“There is a very tricky journey here but I feel it is doable. My vision is that it’s the people supplying the entity that will end up owning it,” Carroll explained.
The co-op chair said that the first thing the joint venture would have to do is “pay a proper price for milk”.
The equity “locked up” within Kerry Co-op would also have to be resolved as part of any deal, the meeting heard.