Some Golden Vale farmers are threatening not to transfer their milk supplies to Kerry Group plc after the takeover unless several conditions they lay down are met by Kerry.

Members of the Irish Creamery Milk Suppliers' Association (ICMSA)met last night to discuss the future of Golden Vale's 120 million gallon milk pool. The Irish Farmers' Association (IFA) plans a similar meeting in the next few days.

Specifically, the farmers want independent testing of milk retained. They want Golden Vale's surplus milk quota "ringfenced" for sale to small producers to increase their milk output. And they want a guarantee on price roughly equivalent to that paid by the neighbouring co-operative, Dairygold, which is about 2p a gallon above the Kerry and Golden Vale price.

Farmers initially welcomed Kerry's surprise offer, which would give them the same price for their milk as Kerry suppliers - the price can be as much as 3p-4p higher at some times of the year. However, following detailed presentations, and taking into account the fact that a collection charge would be deducted, some suppliers now have doubts about the offer.

Last Thursday, 11 of the 17 members of the board of Golden Vale plc signed a letter expressing no confidence in the Golden Vale chief executive, Mr Jim Murphy. The signatories were all farmers.

Two other farmer directors did not sign the letter nor did the other four non-farmer members. Following legal advice, the letter was withdrawn.

Mr Gerard Quain, the deputy president of the ICMSA and a Golden Vale supplier, warned there was a possibility that 12.5 million gallons of Golden Vale milk would transfer to Dairygold Co-operative this autumn, following the transfer from July 1st of one million gallons to Tipperary and Nenagh co-operatives.

Mr Padraig Walshe, chairman of the IFA's dairy committee, said: "Farmers have issues in terms of the transport charge at the moment. Each individual farmer can transfer elsewhere. If all the farmers decided not to go to Kerry, they would have to either acquire the Charleville (milk processing) plant themselves or get another purchaser to take the milk."

The transfer of a huge milk pool to any other processor at this point would be problematic at present as there is little surplus capacity in the industry.