Agricultural Consultants, Agri Environment and Accountancy Services

Milk Supply Agreements

Arising from the termination of Milk Quotas on 31/3/2015, all Dairies/Co-Ops intend putting in place new Milk Supply Agreements (MSA).

Under present rules of most Co-Ops, the Co-Op is obliged to purchase the shareholders milk. However under these new Milk Supply Agreements, new rules are being introduced – some of which are quite onerous.

The period of the Milk Supply Agreement varies in length – some up to 15 years and the terms in relation to penalties and notice periods can be quite penal.

In some cases the signing of a Milk Supply Agreement could be considered to be a method of changing the Co-Op rules by the back door.

For the benefit of dairy farmers on this section of the website, we are publishing Milk Supply Agreements as they become available.

We would advise that you are independently advised in relation to your Milk Supply Agreement by an agricultural consultant or solicitor.

Dairy Farmers can use this site to compare various Milk Supply Agreements. We are only in a position to show these Milk Supply Agreements if they have been provided to us.

For Advice, please contact Richard J. Rea

Email: info@reagroup.ie
Tel:    086-6070686
Should you have received a Draft Milk Supply Agreement or a Final version of a Milk Supply Agreement, we would appreciate it if you could either email it to us at info@reagroup.ie or post it to Richard J. Rea, 8 Grattan Street, Tipperary Town, County Tipperary and we will put it on our Website.

The Milk Supply Agreements hereunder are :

(2014) Gill Milk Supply Agreement (Glanbia Ltd).
(2014) Strathroy Dairy Ltd.
(2013) Wexford Milk Producers Ltd.


(2014) Gill Milk Supply Agreement (Glanbia Ltd).










(2014) Strathroy Dairy Ltd.



 


(2013) Wexford Milk Producers Ltd.

WOULD YOU SIGN THIS PENAL AGREEMENT?

THIS AGREEMENT made the_____ day of ____, 2013 and taking effect on the Completion Date BETWEEN WEXFORD MILK PRODUCERS LIMITED a Friendly Society registered on the Register of Friendly Societies under Registration Number: 2640R and having its Registered Office at Rocklands, Wexford (hereinafter called "the Society" which expression shall where the context so requires or permits include the Board of the Society all related Companies and Societies and their respective successors, assigns, transferees and sub-contractors) of the one part and the person or persons or Corporation named as a Milk Supplier in the First Schedule hereto (hereinafter called "the Supplier" which expression shall where the context permits or requires include his / her permitted assigns or transferees or successors) of the Second Part

WHEREAS:-
A. The Society and Glanbia Ingredients Ireland Limited ("GI1L") have entered into an agreement for the sale and purchase of all issued shares of Wexford Creamery Limited ("WCL"). From the date of completion of that sale and purchase ("Sale Completion Date"), WCL will become a wholly owned subsidiary of GIIL.

B. At the Sale Completion Date, the Society will enter into a Milk Supply Agreement with WCL (hereinafter called "the WCL Agreement") which will be a variation of the existing agreement between the Society and WCL for the supply to WCL of all Raw Milk supplied to the Society by its members. Under the terms of the WCL Agreement the Society, inter alia, has agreed to supply Raw Milk to WCL for a period of 15 years.

C. The Society and the Supplier have agreed to enter into this agreement to secure the supply of milk to WCL pursuant to the WCL Agreement and to reflect and support the terms, conditions and duration thereof.

D. The Society and the Supplier intend that the supply of milk from the Supplier to the Society shall, from the Sale Completion Date, be upon the terms and conditions herein set out in place of all terms and conditions heretofore in force.

E. The Supplier is a member of the Society or is a Company in which the Majority Shareholder is a member of the Society.

NOW IT IS HEREBY AGREED AND DECLARED AS FOLLOWS WITH EFFECT FROM THE SALE COMPLETION DATE:-

1 DEFINITIONS AND INTERPRETATION:-

1.1 For the purpose of this Agreement except where expressly stated to the contrary the following words have the following meanings:

"Agricultural Disease" means agricultural and animal health diseases within the meaning of the term "diseases" as defined pursuant to the Animal Health and Welfare Act, 2013.

"Family Member" means the Supplier's parent, grandparent, spouse, sibling, child, grandchild, uncle, aunt, nephew or niece or a person related within the same degree to his or her spouse.

"Milk Production Enterprise" means the Milk Supplier's farm holding(s) owned or leased by him, cow herd and cow milking facilities with the benefit of a separate Department of Agriculture Herd Number (as stated in this Agreement) in which the cow herd is registered.

"Milk Supply Terms" means the milk supply terms notified by GIIL to the Supplier from time to time including, without limitation, the Milk Purchasing Policy and the Seasonality Scheme.

"Milk Purchasing Policy" means GIIL's milk purchasing, quality and safety policy for manufacturing milk specified in the Second Schedule hereto as same may be amended in writing and notified to the Supplier from time to time by GIIL

"Milk Quota Regulations" means the European Communities (Milk Quota) Regulations 2008 as the same may be amended from time to time and such other regulations as may be in force in Ireland from time to time during the currency of this Agreement regulating the production and supply of Raw Milk in Ireland.

"Normal Reasons" means normal and natural reasons including the retirement, serious ill-health or death of the Supplier or the bone-fide and arms-length sale or transfer of the Milk Production Enterprise, but excluding (a) the sale or transfer for any reason of all or part of the Raw Milk either directly or indirectly to a third party such as an alternative milk processor, and/or (b) the sale or transfer of the Milk Production Enterprise for the purpose, or having the effect, (in whole or in part) of avoiding the supply of Raw Milk to the Society in accordance with this Agreement.

"Raw Milk" means whole fresh milk produced by cows which is unprocessed.

"Reference Volume" means the volume of Raw Milk determined in accordance with Clause 4.

"Seasonality Scheme" means GIIL's seasonality scheme specified in the Second Schedule hereto as same may be amended in writing and notified to the Supplier from time to time by GIIL.

"Third Party Deductions" means payments to third parties which the Supplier has instructed the Society, WCL or GIIL to be made on its behalf.

"Year" means calendar year.

1.2 All reference to Statutory Provisions shall construed as including

  1. any statutory modifications consolidations or enactments
  2. all statutory instruments or orders pursuant thereto

1.3 Except where the context otherwise requires words denoting the singular include the plural and vice versa; words denoting any gender include all genders; words denoting persons include firms and corporations and vice versa 1.4 Clause.

Schedule and paragraph headings shall not affect the interpretation of this Agreement.

2 PURCHASE AND SUPPLY OF MILK

2.1 Subject to the provisions of this Agreement the Society shall purchase all Raw Milk produced by the Supplier and the Supplier shall sell all of the Raw Milk produced by him / her to the Society PROVIDED HOWEVER that if the Supplier is, at the date of this Agreement, also a supplier to GILL, then the Supplier shall continue to supply the Society with at least the same proportion of Raw Milk produced by the Supplier as supplied to the Society on the date of this Agreement.

2.2 Nothing in this Clause shall prevent the Supplier from using raw milk for animal feed within his / her Milk Production Enterprise. The Supplier may utilise raw milk for other commercial purposes within his / her Milk Production Enterprise on request to and with the prior consent in writing of the Society which consent shall not be unreasonably withheld or delayed.

2.3 The Supplier shall not offer for sale to the Society without the consent of the Society Milk from any source other than from his or her Milk Production Enterprise.

2.4 The Supplier agrees that at all times during the continuance of this agreement that he or she will take all reasonable steps to insure a continuing supply of milk to the standards herein provided for and upon all the terms and conditions of this agreement.

2.5 All supply and purchase of Raw Milk will be in accordance with the Milk Quota regulations as long as same remain in force and in accordance with the provisions of this Agreement

2.6 In the event that the Supplier shall while the Milk Quota Regulations are in force dispose of his Milk Production Enterprise during the term of this Agreement either by lease or transfer to a Company in which the Supplier is the Majority Shareholder then this Agreement shall terminate and the Supplier shall procure that the Company shall enter onto an Agreement on terms similar to this herein contained or on such terms as the Society shall decide.

2.7 The Supplier will maintain in force all licences, permissions, authorisations, consents and permits needed to comply with its obligations under this Agreement and will comply with all applicable laws, enactments, orders, regulations and other instruments relating to the production, storage, handling and delivery of Milk

2.8 All sales of Milk pursuant to this agreement will be subject to the Milk Supply Terms. The Supplier warrants that all Milk supplied under this Agreement will comply with the Milk Purchasing Policy.

2.9 The Society may reject any quantity of Milk which is not in accordance with the Milk Purchasing Policy. The Society's reasonable decision as to whether Milk complies with the Milk Purchasing Policy will be final.

2.10 The Society will have the right to enter the Supplier's premises to take samples of Milk and to inspect the production facilities and the equipment (including farm and milk parlours) used by the Supplier in producing the Milk.

2.11 Inspections carried out pursuant to Clause 2.10 will be carried out during normal business hours on reasonable notice to the Supplier, provided that, in the event of an emergency, the Supplier will grant the Society immediate access to his farm and facilities.

2.12 If following an inspection the Society reasonably considers that the Milk is not or is not likely to be as warranted under Clause 2.8 the Society will inform the Supplier and the Supplier will immediately take such action as the Society reasonably requires to ensure that the Milk is or will be as warranted under Clause 2.8. The Society will have the right to reconduct inspections and take further samples after the Supplier has carried out the remedial actions required by the Society.

2.13 The Supplier agrees that the Society may impose new or revised schemes, policies and milk management protocols ("Ancillary Terms"), and such other terms and conditions as the Society and GIIL shall from time to time agree, and as may be advised to the Members of the Society from time to time, provided the Ancillary Terms mirror terms imposed by GIIL on its farmer suppliers. The Ancillary Terms and such other terms and conditions will form part of this Agreement upon notice thereof to the Supplier and the Supplier agrees to be bound by them.

3 MILK PRICE

3.1 Subject to Clause 3.2 the Milk Price to be paid by the Society will, subject to the terms and conditions hereof be a Gross Manufacturing Milk Price equal to that paid by WCL to the Society. That price will be equal to the gross price paid by GILL to its direct farmer suppliers. This milk price will be subject to levies and deductions including but not limited to WMP levy and shareholding contributions as determined by the Board of the Society from time to time. The Supplier authorises the Society to make Third Party Deductions on its behalf and to deduct same from the amount due in respect of Raw Milk supplied.

3.2 The milk price paid by the Society will be determined having regard to the standard of milk supplied and the standard of compliance by the Supplier with the Milk Supply Terms and the milk supply forecasting and peak milk management programmes and such other standards, criterion or requirements which the Society, WCL or OIL may from time to time adopt and notify to the Supplier.

3.3 The supplier will be eligible to participate in any milk price volatility mechanism made available by G11L to its milk suppliers from time to time.

4 SUPPLIER REFERENCE VOLUMES

The Supplier's Reference Volume(s) shall be the Milk Quota held by the Supplier on the VI of April 2013 plus 50% excluding any temporary leasing I flexi milk or animal disease or other allocations. The reference Volume will be adjusted upwards by any milk quota purchased by the Supplier under Milk Quota Trading Schemes for the 2013/2014/2015 quota years plus 50% of such quota purchased.

5 AGGREGATED CAPACITY / CONTRIBUTION FOR GROWTH MILK

5.1 As a result of the WCL Agreement the Society has a processing aggregated capacity of 167.85 million litres which is a 50% increase on Society's processing capacity prior to the WCL Agreement.

5.2 In the event that the Society's Aggregate Processing Capacity applicable from time to time is exceeded in any Year, a contribution for growth milk may be required from suppliers as determined by OIL in accordance with its then applicable milk policies from time to time as implemented with GILL suppliers (currently anticipated to be 2 cent per litre for excess over the Aggregate Processing Capacity). The liability for this contribution will be apportioned pro-rata between farmers that over-supply by exceeding their supplier reference volume or as determined by GIIL and may be collected as a deduction from the relevant farmers' milk price or as provided for in the Milk Purchasing Policy. The principal purpose of this contribution scheme is to procure parity of treatment with suppliers of Gni,.

6 MILK SUPPLY FORECASTS:

The Supplier will be required to provide on an annual basis a rolling three Year forecast of his / her intended milk supply. Such forecast will (a) be in such format as the Society may notify the Supplier from time to time and (b) be submitted by the Supplier to the Society by 3] October in each Year.

MILK SUPPLY PROFILE / PEAK MILK MANAGEMENT

The Supplier will be issued with a 'seasonal supply profile' based on milk supplied during the years 2008/2009/2010. This profile will determine the absolute volume of milk that the Supplier will be permitted to supply to the Society over the peak supply period and on which the full prevailing base manufacturing milk price will be paid. The Seasonality Scheme will be used to manage any over-supply during the peak supply period

8 SHAREHOLDING

The Supplier acknowledges that the Board of the Society may from time-to-time determine as a matter of policy a minimum level or basis of shareholding in the capital of the Society that persons who are milk suppliers trading with the Society are to hold. The Supplier shall comply with all requirements of the Society in that connection as advised to him / her from time-to-time including without limitation any deduction that may be made from payments for milk supplied for the purpose of subscribing for share capital in the name of the Supplier. The current society shareholding standard is 0.72 cent / litre of milk supplied.

9 ASSIGNMENT OR TRANSFER OF MILK SUPPLY PURCHASE AGREEMENT

9.1 This Milk Supply and Purchase Agreement is personal to the Supplier and is not attached to the milk supplier's holding.

9.2 The Milk Supply and Purchase Agreement cannot be traded or leased between parties. It does not constitute an asset of the Supplier or a property right or licence of any kind,

9.3 The Supplier may, but only with the prior written consent of the Society, assign / transfer his / her rights and obligations under this agreement to a 'Family Member' who resides in and whose Milk Production Enterprise is located within the Society's catchment area as determined from time to time by the Society. Any other assignment or transfer will also require the prior written consent of the Society. The Supplier shall not sub-contract any of the Supplier's obligations under this Agreement without the prior written consent of the Supplier. If consent is given, the Supplier will be liable for the acts and omissions of any sub-contractor as if they were the Supplier's.

9.4 A Partner in an existing Milk Production Partnership may with the consent of the Society assign / transfer his / her right and obligations under this agreement including milk reference volumes to his / her partner(s) on the termination or expiry of the Partnership Agreement

9.5 In the event that the Supplier being a member of the Society has been allocated a Reference Volume which is attributable to a Milk Quota which was leased from another member of the Society on the VI April 2013, then the Supplier shall be entitled to such Reference Volume only until the expiry of the lease. On the expiry of the lease the Supplier shall become entitled to such Reference Volume provided the lessor shall have consented in writing to such allocation and in the absence of such consent such Reference Volume shall terminate

10 TERM AND TERMINATION

10.1 This agreement shall come into effect on the Sale Completion Date and shall continue for a period of 15 years from that date and thereafter shall continue unless terminated in accordance with the provisions hereof.

10.2 The Supplier may terminate this Agreement by not less than 30 days' prior written notice to the Society upon the Supplier ceasing the production of Raw Milk for Normal Reasons. Also, the Supplier may terminate this Agreement by giving the Society not less than 36 months prior written notice provided such notice cannot be given by the Supplier within 84 months of the Sale Completion Date.

10.3 The Supplier, notwithstanding the service by him / her of any such notice of termination shall continue to supply to the Society the volumes of Raw Milk most recently forecast by him / her under Clause 6 in accordance with the terms of this Agreement up to the expiry of the notice of termination.

10.4 Except as provided in Clause 10.5, in the event that the Supplier fails to supply Raw Milk in accordance with this Agreement the Supplier will pay to the Society by way of liquidated damages the sum of 6.0cp1 (2.0 cpl based on the previous Year's milk supply times 3 years.)

10.5 In the event that the Supplier fails to supply Raw Milk in accordance with this Agreement (a) after the expiry of 144 months (12 years) from the Sale Completion Date, or (b) after the Supplier has given notice of termination in accordance with Clause 10.2 but prior to the expiry of such notice, the Supplier will pay to the Society by way of liquidated damages the sum of 2.0 cpl based on the previous Year's milk supply times the number of years (or part thereof) left until the notice of termination expires.

10.6 The liquidated damages payable pursuant to Clauses 10.4 and 10.5 shall be paid by the Supplier within 30 days of a notice demanding payment and shall be recoverable as an ordinary contract debt. The Society shall be entitled to set-off any sum owing by the Supplier against any sum owing by the Society (or ON to the Supplier.

10.7 The Society may suspend this Agreement on such grounds as are outlined in the Milk Supply Terms.

10.8 This Agreement shall terminate in the events specified in Clause 2.6 hereof.

11 MILK PURCHASING TERMS AND CONDITIONS

From the April 2014 the purchase of milk shall be subject to Milk Supply Terms. The Milk Supply Terms are hereby incorporated into this Agreement.

12 ASSIGNMENT / SUB-CONTRACTING BY THE SOCIETY

The Society may without consent of or notice to the Supplier at any time and from time to time assign, sub-contract, transfer or deal in any other manner with any or all of its rights and obligations under this Agreement. In particular, the Supplier authorises the Society without further notice to sub-contract to WCL or GIIL all or part of the Society's rights and obligations in relation to the supply and purchase of Milk and associated administrative functions under this Agreement.

13 MATERIAL BREACH

A Party (the Initiating Party) may terminate this Agreement with immediate effect by written notice to the breaching Party (the "Breaching Party") served by registered post of the Breaching Party on or at any time after the occurrence of an event specified hereunder in relation to the Breaching Party.

13.1 The events are:-

  1. The Breaching Party being in material breach of a fundamental obligation under this Agreement and if the breach is capable of remedy, failing to remedy the breach within 30 days starting from the date after receipt of written notice from the Initiating Party giving details of the breach and requiring the Breaching Party to remedy the breach; for the purposes of this clause a breach is capable of remedy if time is not of the essence in performance of the obligation and of the Breaching Party can comply with the obligation within such 30 day period;
  2. The Breaching Party passing a resolution for its winding up or a court of competent jurisdiction making an order for the Breaching Party's winding up or dissolution;
  3. The making of an administration order in relation to the Breaching Party of the appointment of a receiver or examiner over, or an encumbrancer taking possession of or selling, an asset of the Breaching Party.
  4. The Breaching Party becomes bankrupt or insolvent within the meaning of the applicable law or enters into liquidation whether compulsorily or voluntarily (other than for the purposes of a solvent amalgamation or reconstruction);
  5. The Breaching Party ceases to carry on business.

13.2 Termination of this Agreement does not affect a Party's accrued rights and obligations at the date of termination.

14 FORCE MAJEURE EVENT

14.1 If a Party ("Affected Party") is prevented, hindered or delayed from or in performing any of its obligations under this Agreement (other than a payment obligation) by a force majeure event, which is an event beyond the reasonable control of the Affected Party including, without limitation, Agricultural Disease, act of God, war, terrorist activity, riot, civil commotion, malicious damage, compliance with a law or governmental order, rule, regulation or direction, fire, flood, snow or storm but excluding any strikes or other industrial action by a Party's employees or the employees of any of its subcontractors ("Force Majeure Event")

14.1.1 The Affected Party's obligations under this Agreement are suspended while the Force Majeure Event continues and to the extent that it is prevented hindered or delayed, save that a Party is not entitled to rely on this clause 14.1.1 to the extent that it fails to take all reasonable steps to mitigate and reduce the effect of the Force Majeure Event or to provide reasonable precautions or workarounds (including implementing the provisions of any contingency or emergency plans intended to cover such Force Majeure Event);

14.1.2 As soon as reasonably possible after the start of the Force Majeure Event the Affected Party shall notify the other Party of the Force Majeure Event, the date on which the Force Majeure Event started, the effects of the Force Majeure Event on its ability to perform its obligations under this Agreement and shall keep the other party regularly informed or its progress in resuming full performances of its obligations; and

14.1.3 As soon as reasonably possible after the end of the Force Majeure Event the Affected Party shall notify the other Party that the Force Majeure Event has ended and resume performance of its obligations under this Agreement.

14.2 For the avoidance of doubt, if, as a result of a Force Majeure Event, the performance by the Affected Party of some but not all of its obligations under this Agreement is affected, the Affected Party nevertheless remains liable for the performance of those obligations not affected by the Force Majeure Event.

14.3 Neither Party is liable for any costs or expenses of the other Party arising as a result of any Force Majeure Event.

14.4 If the Force Majeure Event continues for more than six months starting on the day the Force Majeure Event starts, or for such other period as may be agreed by the Parties acting reasonably, either Party may terminate this Agreement by giving one month's written notice to the other Party.

15 GENERAL

15.1 This Agreement may be executed in any number of counterpart copies any by the different parties on separate counterpart copies, each of which when executed and delivered shall constitute an original and all such counterpart together constitute but one and the same instrument.

15.2 Without prejudice to any other right or remedy the Society may set off any amount payable by it to the Supplier under this Agreement against any amount of any time due and owing to it by the Supplier ( or any entity owned or controlled by the Supplier) and may also apply any amount due and owing by it under this agreement in discharging any amount due and owing by the Supplier (or any entity owned or controlled by the Supplier) to any related company or society of the Society, and any such application shall constitute a full receipt for an a complete discharge for the Society in respect of all such amounts due and owing by it.

15.3 Any notice or any communication requited or permitted to be give hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand to the addressee or if sent by prepaid post addressed to the party to which such notice is to be given at the address for such party given in this Agreement(or at any other address which may have been notified for that purpose). Any such notice or other communications shall be deemed to have been given if delivered by hand at the time of delivery, and if sent by post 48 hours after the same shall have been posted.

15.4 Save as expressly otherwise provided in this Agreement, no variation of this Agreement shall be valid unless it is in writing and signed by or on behalf of the parties hereto.

15.5 A waiver by either party of a breach of a provision of this Agreement will not be considered as a waiver of a subsequent breach of the same or another provision.

15.6 This Agreement contains the entire agreement between the parties with respect to its subject matter, supersedes all previous agreements and understandings between the parties, and may not be modified except by an instrument in writing signed by the duly authorised representatives of the parties. Each party acknowledges that, in entering into this Agreement, it does not rely on any representation, warranty or other provision except as expressly provided in this Agreement, and accordingly all conditions, warranties or other terms implied by statute or common law are excluded to the fullest extent permitted by law, but nothing in this agreement will affect the liability of either party for fraudulent misrepresentation.

15.7 Each of the provisions of this Agreement is separate and several and is enforceable accordingly. If at any time any provision is adjudged by any court of competent jurisdiction to be void or unenforceable the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. If any invalid, unenforceable or illegal provision of this Agreement would be valid, enforceable and legal if some part of it were deleted or amended, the parties shall negotiate in good faith to amend such provision in an appropriate manner.

15.8 This Agreement shall be governed by and construed in accordance with the laws of Ireland. Each of the parties hereto hereby agrees that the courts of Ireland shall have exclusive jurisdiction to hear and determine any suit, action or proceedings that may arise out of or in connection with this Agreement and for such purposes irrevocably submits to the jurisdiction of such Courts. It is acknowledged that prior to institution of any such suit, action or proceedings, the parties will engage in good faith in mediation, arbitration or other consensual dispute resolution procedure for the resolutions of any difference arising in accordance (where relevant) with the Rules of the Society.

15.9 The Supplier consents to the Society obtaining from third parties such information (other than financial information in relation to the herd(s)) of the Supplier) as the Society may reasonably request such third party to provide from time to time. The Supplier will, if so requested by the Society, confirm such consent to any such third party, to facilitate the provision to the Society of any such information.

15.10 The Supplier authorises the Society, WCL, GEM and their respective affiliates ("Relevant Parties") to share / exchange information relating to milk supplies by the Supplier to the Society for the purposes of performing this Agreement and the WCL Agreement. The Supplier consents to the collection and disclosure to and amongst the Relevant Parties of personal data relating to the Supplier where it is necessary or desirable for the foregoing purposes.

15.11 The Relevant Parties may also use the Supplier's personal information to provide him / her with information about goods and services which may be of interest to him / her. If the Supplier does not wish information to be shared for such purposes then he / she can opt out of ticking the following box.