Milk suppliers must be 'central' to Kerry Group deal - ICMSA

The position of milk suppliers supplying Kerry Group must be central in any agreement on the future ownership of the processing facilities.

That’s according to the Irish Creamery Milk Suppliers’ Association (ICMSA) in relation to ongoing speculation regarding the future of milk processing for dairy farmers supplying the group.

President of the ICMSA, Pat McCormack, said that the association has met with Kerry Co-op, has sought a meeting with Kerry PLC and will also request meetings with other interested parties that might emerge.

“We will be saying very clearly to every party involved that the processing of milk for Kerry suppliers must be placed on a firm financial footing in whatever new entity emerges and the new entity – if there is one – must deliver on the contractual obligations to milk suppliers, including the milk price commitment,” McCormack said.

ICMSA president Pat McCormack

“This commitment was made by Kerry Group in 2011 and it is essential that it is delivered going forward”, McCormack added.

Impact for milk suppliers

McCormack said that Kerry’s milk processing facilities are critical to farmers and the wider rural economies in Kerry, Limerick, Cork, Clare, Tipperary and Galway and it must be a “fundamental requirement” of any new structure or arrangement that emerges – if any – that the position of milk suppliers is fully protected.

AgriLand previously reported that one milk supplier and co-op shareholder has warned that Kerry Co-op needs to be aware of all the pitfalls of a proposed deal to go into a joint venture to take over the milk processing division of Kerry Group.

Also Read: Kerry Co-op: What’s at stake in bid for milk processing joint venture

It followed the emergence of a potential third-party buyer for the milk processing business, which has increased the price of this to €800 million.

Fergus McCarthy, a Kerry Co-op member and dairy farmer from Co. Limerick, said: “I am very concerned about the latest proposed bid by the co-op to increase the current offer of €640 million to €800 million in order to be allowed to do a due diligence on the new joint venture.”

He highlighted that the venture would see the creation of a company that will be on a 60:40 ratio for the co-op and plc respectively.