Suppliers of North Cork Creameries who are in fixed milk-price contracts are calling on the board of the co-op to release money from a milk stability fund to help farmers who are struggling.

According to the co-op’s annual report, €4.8 million is available through the fund to “support future milk price”.

The report states that the purpose of the fund – from which payments must be made within 36 months, or are liable for tax – is to “lessen adverse milk-price movements”.

“The board believes that, on the basis of recurring market volatility, payments from the stability fund are likely to arise within that timeframe” the report states.

But farmers tied into fixed-price contracts say that adverse milk prices have impacted them for some time, and that milk stability fund payments should be made available now, to those who need it, and to those who want it.

Where did the stability fund come from?

This €4.8 million milk stability fund was created by North Cork Creameries by setting aside a small percentage of the price per litre of milk paid to all farmers in 2021 – fixed-contract and non-contract farmers.

It is understood that this fund is the equivalent of around 5c/L per farmer based on milk supplied in 2021.

The 36-month time period within which the fund is to be paid to farmers commenced on December 2021.

The idea behind the stability fund is to cushion the blow to farmers should milk price crash from its current high.

The fund would allow North Cork Creameries to pay out a few cent more per litre to bring that price back up somewhat.

“This is farmers’ money”

One farmer who spoke to Agriland on condition that their identity would not be revealed said:

“Are we not in a situation now when we need that money? This is the farmers’ money, it is the farmers’ money to be paid back to them.

“We have been told that the board decides when this gets paid out, so we can’t get our hands on it.

“What we want is for the farmers who need it this year to get it, and let the others draw it down another time.

“The line [in the report] is to ‘lessen the adverse milk price movement’, well 31.5c for milk that is making 51.5c, that is a movement,” they said.

Another farmer said that the milk stability fund would be worth around €25,000 to him if it were paid out this year.

North Cork Creameries

A number of questions put to North Cork Creameries specifically relating to the milk stability fund were not answered.

In a statement to Agriland, the co-op said:

“We continue to work directly and individually with all suppliers on fixed milk-price contracts to support them as much as we possibly can and will continue to do so.

“North Cork has had an interest-free working capital support scheme in place for some time, and that is open to any farmers to participate in over one to three years in line with individual requirements.”

When asked for the number of farmers participating in it, the co-op stated:

“A majority of milk suppliers on fixed milk contracts are availing of the scheme, in addition to other measures recently implemented.”

The outlier

Agriland understands that around 120 of the 240 farmers supplying North Cork Creameries, are tied into fixed milk-price contracts.

Some of these farmers have significant volumes of milk committed – up to 90% – and are receiving substantially less than the non-contracted price – more than 20c/L in some instances.

It is also understood that 12 of these fixed-price suppliers have 100% of their milk under contract.