South Caernarfon Creameries and member farmers work together on New Supply Agreement

South Caernarfon Creameries has announced phased changes to its farmer supply agreements following a review of their current payment schedules. Having undergone a strategic review, the company completed a 5 year business plan in early 2010 and one of the outcomes of this was to have a basis to branch review their milk supplier contracts and ensure that members were made aware of the type and profile of milk that was required by the Creamery.

An enormous amount of communication and consultation has gone on with our member farmers before we reached our final position explains Alan Wyn Jones, Managing Director at South Caernarfon Creameries. From the outset, we wanted to share the plans with our members. Being a co-operative, the farmer members own the business therefore its important that they understand where we want to take the business and that we explain what type and profile of milk we need to ensure the Creamery operates at optimum performance.

South Caernarfon Creameries appointed farm business consultants The Andersons Centre to help deliver the project and also to provide a balanced view from both producer and processor perspectives.

We believe that the payment schedules now more truly reflect the cost of production at different times of the year and are fair in terms of constituent and volume production. Of course the base price is a fundamental part of a supplier contract but we also strongly believe that the supplier and processor need to work together to maximise returns; ultimately this will make our contract more competitive in the market place. The scheme is being introduced from April 2011 and phased changes to the seasonality payments will commence 1^st July 2011. A new volume bonus will also be introduced in July. Benefits and returns will be weighted in favour of constituents and quality rather than members receiving fixed payments.