The CEOs of the eight member co-ops of Ornua are to be called to appear before the Joint Oireachtas Committee on Agriculture, Food and the Marine (JOCAFM).
It is hoped that this will occur before the summer recess, which is due to commence on July 14.
The heads of Aurivo; Arrabawn; Carbery; Dairygold; Glanbia; Lakelands; North Cork Creameries; and Tipperary Co-op will be asked to attend a private meeting of the committee to provide more detailed information on fixed milk-price contracts, the volumes of milk involved, number of farmers in financial strain and the customers they sell their products to – other than Ornua.
The call for a meeting with these CEOs came from Deputy Michael Fitzmaurice, and was supported by Senator Paul Daly, at a sitting of the committee this week.
Ornua was represented at the meeting by its CEO, John Jordan; managing director, trading and member relations, Colin Kelly; and corporate affairs director, Anne Randles.
Ornua was called to answer questions on its fixed-product contracts with its co-op members and on its recent offer of support to help farmers who may be in financial strain, among other general fixed milk-price contract issues.
However, over the course of the questioning, it became clear that the committee’s more specific questions on fixed milk-price contracts between co-ops and farmers could not be adequately addressed by the Ornua representatives present.
Ornua CEO, John Jordan, reiterated several times that it has no involvement in, or sight of, the contracts that are offered to farmers by co-ops.
Ornua, he explained, enters into agreement with its member co-ops by way of a fixed product-price contract. This determines the volume of dairy products it purchases from co-ops.
This product could be butter, cheese, or powder – skim milk powder, fat-filled powder, rennet, or casein – for example.
The CEO stated that when it offers a fixed-product price to co-ops for such products, Ornua is not aware of how that then translates to the fixed milk price offered to farmers.
CEOs should be here
Deputy Michael Fitzmaurice said that it was important that the co-ops themselves should be represented to answer such questions.
Over the course of the meeting, it emerged that Ornua is responsible for buying the equivalent of approximately one third of the total volume of milk that is under fixed milk-price contracts.
That total volume is estimated to be 1 billion litres.
Deputy Fitzmaurice stated that the remaining milk volume must also be accounted for, and questions asked of those other co-op customers.
“We need to drill this down if there are 600 or 700 milion litres gone somewhere else that we don’t know about. With the will of the committee, within a month of the holidays, we bring in the individual CEOs of the eight co-ops,” he said.
“This needs to be nailed down for the farmers or we are going to be in bother.”
No sight of contracts
CEO, John Jordan clarified that Ornua is only “absolutely concretely aware” of the volume of milk that it has fixed.
“We have no sight or sign of a relationship that co-ops have with [other] customers on fixed product.”
And, he said, he wanted to be clear that his original reference to 1 billion litres of milk under fixed milk-price contracts came from a report in the media. The total volume, he said, is not known to Ornua.
On a number of occasions, he was asked to return to his board and explore if Ornua could do better for those farmers who are struggling.
But he stayed committed to the line that Ornua had made a proposal “that offers some flexibility in the volume and value of the contract” that it has with member co-ops.
He reiterated that the offer was taken up by some – two – of the co-ops that offer fixed-price contracts to their farmer suppliers; some have not accepted the offer; and there are other co-ops to which the offer doesn’t apply.
As reported by Agriland, Glanbia and Dairygold have declined to take up this offer from Ornua.
The Ornua CEO said he did not know the reason why the co-ops declined the offer: “That is an individual decision that co-ops have made, they have either told us that they are accepting of the deal, or not.”
Pressing further for details, Deputy Fitzmaurice asked the CEO: “They haven’t gone into the nitty gritty of it, no?”
“To be honest, no,” said the CEO.
“Jesus,” Deputy Fitzmaurice said back to him, before chair, Deputy Jackie Cahill, moved things to a close.
And he asked again that the Ornua CEO go back to its board and try to come up with a better financial solution for farmers.