The issue of fixed milk-price contracts (FMPCs) is back on the agenda for the Joint Oireachtas Committee on Agriculture, Food and the Marine today (Wednesday, June 22) with representatives from Ornua, Ireland’s largest exporter of Irish dairy products, due to appear before it.
The dairy co-operative, which markets and sells dairy products on behalf of a number of Irish co-ops – and indirectly, Irish farmers, will address the committee in relation to fixed-price contracts, among other industry-related items.
It is understood that Ornua CEO, John Jordan, will be in attendance when the committee convenes this evening.
With eight member co-ops – Aurivo, Arrabawn, Carbery, Dairygold, Glanbia, Lakelands, North Cork Creameries and Tipperary Co-op – Ornua has been referenced regularly in fixed-price contract conversations.
In a recent interview, Jordan told Agriland that Ornua had offered support to its member co-ops aimed at providing a level of flexibility to alleviate financial strains experienced by some farmers tied into fixed milk-price contracts.
The offer on the table was 10c/L back on 10% of the fixed-product volume that it currently purchases from its member co-ops for 2022.
However, Glanbia and Dairygold have both confirmed that they will not be accepting this offer.
Dairygold stated that this offer from Ornua was conditional on Dairygold suppliers committing to additional fixed milk-price volumes in 2023 at 42c/L.
“This is significantly lower than the current market expectations, so a milk price in 2023 of greater than 42c/L will see Ornua recoup all or a significant portion of the support offered this year.
“On this basis, Dairygold will not be progressing the Ornua offer with members,” a spokesperson said.
Glanbia recently said it was continuing to engage with suppliers who are involved in its fixed milk-price schemes, adding that discussions are not fully concluded yet.
Commenting in advance of the Oireachtas committee meeting, its chair, Deputy Jackie Cahill said:
“The committee welcomes this opportunity to meet with Ornua to discuss its role in the dairy sector and how they can help alleviate the severe financial pressure currently felt by farmers.
“Dairy farmers are locked into fixed milk-price contracts, which govern what they are paid for their milk output. Over the last six to 12 months, they have faced unprecedented increases in input costs on feed, fertiliser and fuel, which have seen many suffer serious financial hardship.”
Ornua is Ireland’s largest exporter of Irish dairy products, exporting to 110 countries worldwide. It is headquartered in Dublin, and has annualised sales of over €2.3 billion and a global team of 2,850 employees.
In 2021, the company reported a 1.3% increase in operating profit – from €151.8 million in 2020 to €153.7 million. In the same year, it purchased 389,000MT of Irish dairy product
Ash dieback
The committee’s second session of the evening turns to the impact of ash dieback on the private forestry sector, with representatives from Limerick Tipperary Woodland Owners Ltd. (LTWO).
Commenting, Deputy Cahill said:
“We will again discuss the impact on forestry owners who have suffered financial losses due to no fault of their own from the devastation of their plantations from ash dieback.
“We will hear from plantation owners from Limerick and Tipperary on what they believe is needed to alleviate the financial losses and other problems caused by ash dieback.”