‘Valuable tool’: Kerry Futures option welcomed

The announcement that Kerry Group has developed a “Futures” market option for its suppliers has been welcomed by the Irish Creamery Milk Suppliers’ Association (ICMSA).

Earlier today, it was revealed that Kerry Group has unveiled a new price volatility measure for its suppliers in the form of the Kerry Agribusiness Forward Price Scheme.

Also Read: Kerry Group unveils ‘Forward Price Scheme’

“Future Contracts” will allow Kerry Agribusiness to offer forward price schemes on a more regular basis to the processor’s milk suppliers, according to a spokesperson for Kerry.

Chairperson of ICMSA’s Dairy Committee, Gerald Quain, said that the option could prove to be another valuable tool in the ongoing effort to mitigate “ruinous” price and income volatility.

Quain said that he expected Kerry suppliers to seriously consider the option as they attempt to hedge against what is still a very fluid situation – albeit one that he believes is turning in favour of the farmer-supplier.

He said it is important that Kerry Group provides as much clarity as possible on the workings of future markets and the basis of the price being offered in terms of the application or non-application of bonuses and penalties.

“ICMSA has always stressed that it is in everyone’s interest to end this extreme and wildly fluctuating peak-to-trough cycle that completely exposes farmers with borrowings or even – as we saw just a month ago – farmers with fodder issues and increasing input costs,” Quain said.

“We have to systematically look at the whole sector and the supply-chain and identify the points where extreme and sudden pressures can be exerted that cause this kind of really abrupt price collapse that, in turn, collapses income,” he added.

We have repeatedly highlighted this as possibly the single biggest challenge facing the sector and we believe that this ‘Futures’ option can be one of a suite of measures – along with a Government regulated deposit scheme – that can be used to address that volatilty.

“The Futures option is a positive development and farmers should carefully consider its relevance and applicability to their business at this time,” the chairperson concluded.