Dairy producer Aurivo denies manipulating quota system

One of two dairy processors involved in a High Court action over milk supplies has hit back at claims it is using the milk quota system to force a competitor out of business.

Donegal-based Green Pastures and Natural Dairies, part of a group owned by the Molloy family, are suing a competitor, Aurivo, claiming it is using its excess milk quota to lure their suppliers into breaching their supply contracts with the companies. They have told the High Court this is part of an Aurivo campaign designed to drive the group out of business.

However, Aurivo said at the weekend that milk quota remains at all times under the ownership and control of individual farmers. “Milk processors have no role in determining what quota an individual farm or farmer is allocated,” it said in a statement.

Aurivo also pointed out that farmers have the right to transfer between milk processors, once they give three months and one day’s notice.

The co-op said the fact that milk suppliers can move between milk processors was a key reason why the Competition Authority approved Connacht Gold's acquisition of Donegal Creameries dairy business last year, the deal that created Aurivo.

“The authority concluded that Aurivo would not be dominant in the market for the acquisition of raw milk, in Donegal or at all,” the co-op said.

It also accused Green Pastures of a lack of transparency as it does not disclose the price it pays farmers, although it maintains it pays more than the co-op.

Trademark campaign
Aurivo's prices are audited annually by KPMG and published as part of an industry-wide review. Green Pastures and Natural Dairies do not take part in this.

Green Pastures and its related companies are owned through Jersey-based entities, which, Aurivo said, minimises the financial information they are obliged to disclose.

There are increasing concerns about the levels of competition in the dairy industry.

Northern processors claim the National Dairy Council (NDC) trademark campaign, which only promotes milk produced and processed in the Republic has cost them £50 million (€59.7 million) since it was introduced in 2009.

The Dairy Council Northern Ireland is planning to take a case to the European Courts alleging the scheme is a breach of single-market rules. Dale Farm recently lost the contract to supply private-label milk to Superquinn, which is being merged with SuperValu, to Aurivo. The chains' owner, Musgrave, had tendered for suppliers that were NDC-approved.

SuperValu confirmed it was committed to stocking NDC-certified products and said it expected to sell €58 million worth of Dairy Council-approved milk this year.

Tesco also confirmed its own-label milk must carry the council's trademark.

German discounter Aldi has also moved some of its business to Arrabawn in Tipperary from Strathroy in Co Tyrone, which was its only supplier when it first established its Irish business. The company buys all its milk from farms in the Republic but Strathroy processes a portion of it.

Northern concerns
Part of the Northern industry's concern is based on the fact it believes the NDC and Irish Farmers' Association (IFA) have been campaigning jointly to put pressure on retailers to use only council-approved milk.

Both organsiations deny the existence of a joint campaign, but the IFA said it was very supportive of the NDC’s work, as it promotes milk produced in the Republic.

NDC chief executive Zoe Kavanagh said the campaign was launched in 2009 in response to a survey showing that consumers wanted to know where their milk came from.

The mark is not a guarantee of quality, only of origin, according to Ms Kavanagh.

She also conceded that there is no real difference between milk produced in the North and that produced in the Republic.