THE Carbery Group, owned by West Cork’s four co-ops, will not be paying its 1,300 shareholders, who supply Barryroe, Bandon, Lisavaird and Drinagh, an annual bonus this year.
The group have paid a 1c per litre bonus for two of the past five years; and a total of five times out of the past 11 years. Typically per shareholder it was worth on average of between €5,000 and €6,000.
However, in a statement issued to The Southern Star, Carbery, which is headed up by Kerryman Jason Hawkins, said: ‘Decisions to declare year-end milk price bonuses to the co-ops, are taken on a year-on-year basis by the Carbery board. Historically, they are not paid every year; they are the exception rather than the norm.
‘During 2018, Carbery continued to pay a very strong milk price over the course of the year, which included extending support payments, which were paid for a longer period of time, due to the severe and adverse weather conditions experienced throughout 2018.’
The statement added that Carbery ‘always pays a premium milk price to its four shareholder co-ops of Bandon, Barryroe, Drinagh and Lisavaird, which is higher than its industry peers.’
However, while acknowledging these above-average prices, several West Cork farmers are unhappy about the decision by the global food ingredients, flavours, and cheese manufacturer.
Michael O’Donovan, a Rossmore farmer who supplies Drinagh Co-Op, pointed to Carbery’s increased operating profit and decreased debt and said they were ‘not looking for what’s not there.’
He said he had budgeted for the payment – he got €6,000 last year – in his cash flow projection for the year and added: ‘We are told we’re getting the best milk prices in the country – but that holds no weight. Carbery is obliged to pay farmers what the product returns. I have great respect for Carbery, but a pile of farmers are angered by this and a lot more of them don’t even know about it yet.’
One of West Cork’s largest dairy farmers, Derry O’Donovan of Castlehaven, who along with his two sons milks upwards of 600 cows in and around Skibbereen, described the Carbery decision as ‘disappointing.’
‘We’ve just finished the most difficult year we’ve ever had with weather, along with pressure on prices and Carbery go and make a decision like this.’
He described the bonus as ‘minimal in the overall context,’ considering that Carbery considerably reduced its debt over the past two years.
Chair of Carbery, and a dairy farmer himself, Peter Fleming, said the board could have taken a populist approach and paid the bonus, but he asked at what cost?
‘We could bleed the company dry, but we have to be prudent. The board of Carbery has to represent the milk suppliers of West Cork and get the best deal for them, but at the same time be conservative and reinvest. Is it’s not all about us, but those who come after us.’
He pointed to their prices being above those paid by Kerry group and Dairygold, and Carbery suppliers being the ‘envy of the dairy industry.’ He also highlighted their drought payments which were only ceased at the end of November.
A sum of €4.3m, spent in this way during the year, has now been returned to the Stability Fund, which has been restored to €10m – which, if not spent in three years, will be returned to farmers.
‘The support is given when it is needed, and not accumulated. The bonus is a self-initiated expectation and is never a given,’ he concluded.
However, Drimoleague farmer Dan McCarthy he was ‘concerned’ by the decision:
‘The plant is run very efficiently, and it may well be true that we get the highest milk prices, but that has no bearing on the bonus if the profits are there from milk processing.’
Meanwhile, work has started at Carbery’s headquarters in Ballineen to allow the plant increase its milk capacity and allow Carbery diversify its cheese manufacturing portfolio, which – in the context of Brexit – is crucial.
The expansion will give them flexibility to manufacture new cheese products such as mozzarella or pasta filata – as opposed to relying entirely on their award-winning cheddar.
Jason Hawkins previously described it as ‘cheese diversification which services multiple markets and potentially multiple products.’
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