ICOS ready for new era of local empowerment

The Irish Co-operative Organisation Society has named Seamus O’Donohoe as its new chief executive officer.

O’Donohoe has worked as ICOS company secretary for several years, having also served as director of member development. ICOS represents co-operatives and organisations in Ireland — including the Irish dairy processing co-operatives and livestock marts — whose associated businesses have a combined turnover of around €12bn.

The organisation says it has 150,000 members, employs 12,000 staff in Ireland and a further 24,000 overseas.

A native of Co Galway, O’Donohoe has an MBA from Smurfit Business School and is a member of the National Economic and Social Council (NESC).

He takes over from Tom O’Callaghan, who has left the co-op after over 12 months at the helm, to pursue a career opportunity in the private sector.

* An industry which hasn’t made big waves in recent years, yet is still one of the top performers in Irish business now. Does that sum up the co-op dairy sector?

>>Despite steady progress in the last decade, agri-food’s achievements have tended to be defined within the era of milk quotas and, in recent years, the industry was somewhat overshadowed by developments in the high tech ICT and pharma sectors. Recent years have seen a renewed focus on agri-food due to the sector’s improved global performance and its increasing overall contribution to the national economy.

* Irish dairy co-ops have stood still in relative terms while competing dairy industries achieved valuable economies of scale — true or false?

>>Irish dairy co-operatives have not stood still. There have been significant progressive developments in Irish dairy co-operatives that are yielding ongoing cost savings to their farmer members. There has been investment in new plant, upgrading of existing plant and significant collaboration between individual co-operatives in milk assembly and co-processing. There has also been consolidation in the sector.

* Irish dairy co-ops have been more successful in production terms overseas than in Ireland. Here at home, private firms still play a huge role, in baby food, for example. Do you agree?

>>There is no doubt that the dairy aisles in Ireland, outside of liquid milk, butter and cheese are heavily influenced by global giants like Muller, Lactalis, and Danone. Irish co-ops can have little influence over this. Our dairy production is dominated by our seasonal “commodities” output. We are too far from the centre of Europe to develop huge consumer food brands (yoghurts, dairy drinks etc), and the Irish market is simply too small as a platform from which to launch a new Muller. In terms of risk taking and the positioning of Irish dairy, the focus has to be on the return per litre of milk, and building on our efficient, green, seasonal production model, using very efficient processes to develop routes to market for butter, cheese, and powders.

* The Government is working on new co-op business regulations. How are new regulations likely to help co-ops?

>>At present most of the legislative resources of government in the area of business are focused on the finalisation of the new Companies Bill. There is a commitment to review co-operative legislation, in particular the Industrial and Provident Societies Act 1893-1978. ICOS have been working closely with the Department of Jobs Enterprise and Innovation on this task and will be seeking to have the first set of new legislative enactments in respect of this Act adopted in 2012.

* ICOS has reported progress in areas such as corporate governance and director training. What will be the benefits for co-op members?

>>Any organisation, co-op or company is only as good as its strategy, and it is vitally important for co-op directors, when they are around the boardroom table to think and act strategically for the long term benefit of the business and its members. ICOS will continue to expand the resources it commits to this activity and will build further on the very successful series of training and development initiatives that ICOS has organised in this area over the last number of years.

* The co-op dairy industry faces its biggest shake-up in 30 years when EU milk quotas go in 2015. What new challenges does that bring for ICOS?

>>Any transition from a system of market supports to a more free market creates uncertainty for farmers and co-op leaders. ICOS, however, would view this transition as a positive challenge. The main challenge facing ICOS will be to ensure that the templates developed by the dozen or so milk processors respect the co-operative ethos and principles, that they maximise farmer member ownership and control, and that they are sufficiently cohesive so as not to impede further consolidation. This is a tough challenge as, across our dairy co-ops there are a dozen different ownership, control and governance structures, with different levels of plant utilisation, etc.

* Will it be harder or easier to achieve structural changes when the priority after 2015 becomes to process an increased volume of milk?

>>As EU market support systems continue to weaken, dairy farmers are realising that, while being paid a good price for their milk is important, so too is having security in terms of who is going to assemble, process and market their expanding milk supply. This change will, I believe, cause dairy farmers and their leaders to focus more on the manner in which structural change can be optimised in the sector. And this will have to be done in an environment where the challenge posed by the volume increases, will be added to by resultant volatility and market uncertainty.