The decision by Kerry Co-op shareholders to overwhelmingly back a proposal to buy Kerry Group’s dairy business, Kerry Dairy Ireland, has been described as “a watershed moment”.

Noel Murphy, the Irish Creamery Milk Suppliers’ Association (ICMSA) dairy chair, was reacting after 82% out of 2,392 Kerry co-op shareholders at a Special General Meeting (SGM) yesterday (Monday, December 16) voted in favour of the €500 million deal.

Kerry Dairy Ireland, which employs 1,500 people, processes over 1.1 billion litres of milk annually from 2,740 family farms across Munster.

The business has a range of well-known consumer brands, along with seven production facilities across Ireland and the UK and 31 agri-services stores in Munster.

Kerry Co-op

Noel Murphy, who milks over 100 cows close to Milltown village in Co. Kerry and supplies Kerry Group, told Agriland that he voted for the deal.

“We had a lot of issues to get out of the way and to try and clear, not alone the structure and the joint venture, but the arbitration side of things.

“I’d be happy enough that we can change the trajectory and bring it back to a pure co-op and that can’t be but a positive thing,” he said.

Kerry Group has agreed to put a €50 million fund in place to resolve the ongoing arbitration dispute with suppliers over leading milk price, subject to the deal being accepted.

This would involve a cumulative payment of 5.4c/L to suppliers for the years from 2015 to 2020 as per their milk supply contract.

Murphy acknowledged that there is “unhappiness” and “aggravation” among milk suppliers that this payment is not being made on all milk supplied during the period.

Noel Murphy, ICMSA Dairy Committee chair Image: Domnick Walsh Eye Focus
Noel Murphy, ICMSA Dairy Committee chair Image: Domnick Walsh Eye Focus

The ICMSA dairy chair said that Kerry Co-op and the new board of Kerry Dairy Ireland will have to “build bridges” with “dissatisfied” milk suppliers.

“It’s from now on really that difficult and hard work has to start and the delivery as well of results, a good milk price going forward and a structure that caters for all their shareholders in a positive way,” he said.

The deal would mark a significant milestone, with Kerry Group (plc) moving to become a pure taste and nutrition business and Kerry Co-op regaining control of dairy processing.

“It’s a watershed moment for all suppliers and all Kerry farmers.

“We’re coming back out of a long time under the plc. We did sell the entity to the plc and it did create a lot of value in the catchment area in Cork, Limerick, Kerry and Clare.

“Going forward, we have to look at the future and look at where this structure can take us.

“We have to try and work together and make the most of it. Relationships have to be built up again and that’s going to be a job of work.

“Hopefully, it will be a very positive thing to come back to a pure co-op that can work for the farmers,” he said.

Dairy

Similar to other dairy processors, Murphy said that the biggest hurdles facing Kerry Dairy Ireland will be the age profile of milk suppliers, attracting young farmers into the sector and the nitrates issue.

“Where we’ll go and how we’ll solve that is going to be difficult to be honest about it. There’s no doubt about it but there will be issues around processing and having too much capacity,” he said.

The ICMSA dairy chair noted that a lot of cows have not been able to produce to the best of their ability over the past two years due to poor weather conditions.

The next step for the proposed transaction is to secure the approval of the shareholders of Kerry Group.

The company will hold an Emergency General Meeting (EGM) at the Rose Hotel, Tralee, Co. Kerry, at 2:00p.m on Thursday (December 19).

If the deal also secures the green light from Kerry Group shareholders, James Tangney said that it is hoped to have the first phase of the transaction completed by the end of January 2025.