Farmers call co-op group a ‘toothless talking shop’

THE co-ops’ umbrella body, ICOS, has been described as a “toothless talking shop” at the European Dairy Farmers Congress in Cork.

Leading dairy farmers Michael Murphy from Cork and Mike Magan from Longford, levelled the charge in a joint critique of the Irish dairy industry.

Mr Murphy, who has experience of farming not only in Ireland but also in New Zealand, Argentina, Chile and the US, warned dairy companies would go bust in Ireland within the next 12 to 18 months.

In his remarks, Mr Magan, a former co-op chairman and past board member of ICOS, stressed his comments were critical more of the system than of the individuals within it.

Both men said the dairy industry is not ready for the real world and what is happening internationally but nobody has a mandate in the current format to bring about necessary change.

They claimed co-op directors show a lack of business skills, that change is mostly brought about under duress and that there is a lack of representation for committed commercial farmers.

Pointing out that farm organisations are very political, they said short-term posturing is not helpful and is often mischievous and damaging.

They claimed cross-subsidisation of milk price by other activities in dairy co-ops has distorted market signals.

Government aid for the processing sector in 2007/2008 was counter-productive and delayed change, they told 260 delegates from 21 countries.

They also said trade unions exist that will resist job losses, suggested that co-op management is very comfortable as it is and that the Dairy Board welcomes a fragmented co-op structure.

They stressed, however, that Ireland has a comparative advantage over other milk producing countries with a long grass-growing season, low production costs on farms and other factors. But it is at a disadvantage in that 100% of its milk is processed by 13 dairies compared with New Zealand, where one dairy processes 95% of the milk.

A single dairy processes 90% of the milk pool in Denmark and in Holland one dairy processes 86% of its milk.

Each of those countries also has integrated processing and marketing while Ireland has none and is hugely over-reliant on butter.

Predicting that Irish milk production is likely to quadruple in the next 25 years, they noted that 70% of Irish land is used for loss-making beef.

They suggested the dairy industry must mandate a small core group to devise a plan for change with an agreed delivery date.

“We need efficient scale and we need integration of processing, marketing and research and development,” they said.

European Dairy Farmers president Jean-Francois Verdenal said Ireland has a large potential to expand in milk production when the quota system will be dismantled. “The country has the best climatic and natural conditions for low-cost grass-based milk production with simple systems,” he said.