Kerry Group has told its suppliers that it is “reviewing its approach” to milk volume management as the aggregate guaranteed volume has been surpassed.
Around the time of the abolition of milk quotas, it was agreed by Kerry Group that suppliers could increase their milk supply without any limit or cap, as long as the total aggregate milk supply across all suppliers did not increase by more than 20%.
This aggregate increase was in line with what could be handled by Kerry’s processing capacity.
At the time, Kerry Group said that, if aggregate supply increased by more than 20%, then it would look at implementing mechanisms to deal with the excess supply.
Suppliers have now been told that the aggregate guaranteed supply increase of 20% was exceeded last year.
A spokesperson for Kerry Group told Agriland: “Milk suppliers have been informed that the aggregate guaranteed volume allowed for under ‘Clause 3’ of the Milk Supply Contract was surpassed in 2020.
“The business is currently reviewing its approach to future milk volume management and will communicate plans to milk suppliers in due course,” the spokesperson added.
What these plans for dealing with the excess supply will look like remain to be seen.
Kerry milk price
In Kerry Group’s latest milk price announcement (on October 13), the processor said its base price for September supplies will increase by 1c/L to 36c/L, including VAT, at 3.3% protein and 3.6% butterfat.
At standard European constituents of 3.4% protein and 4.2% butterfat, the price is 39.53c/L.
According to the group, the average milk price return based on Kerry’s average milk solids for September will be 42.37c/L including VAT and bonuses.
Also this month, Kerry Group announced a new three-year fixed milk price scheme for suppliers.
Kerry confirmed that the price for the scheme is set at 33.1c/L at 3.3% protein and 3.6% butterfat, including VAT.
The scheme will run from March to October for the years 2022, 2023 and 2024.