80% of shareholders endorse €150m plan

Dairygold shareholders have endorsed the co-op’s post-2015 €150m expansion plan, following two back-to-back meetings yesterday at its premises in Mallow, Co Cork.

Just over 2,000 members attended the AGM and SGM at the Powder Store in Dairygold’s main yard in Mallow, debating and then voting upon three motions. The first motion was tabled by Dairygold’s general committee, calling for members to endorse the co-op’s financial plan for post-quota expansion, including the disputed milk supply agreement (MSA), and was passed by an 80% majority.

The second motion, tabled by DMSSG, a group of Dairygold shareholders opposed to the MSA, calling for the MSA plan to be shelved and for a new plan to be devised, was rejected by a similar margin: 79.2% against, 20.8% for. This group’s other motion, seeking independent quality testing of their milk supply, was also rejected by 72% to 28%.

Dairygold’s executive team has welcomed the result, adding that the recent months of discussion and analysis have been positive proof of the group’s inclusive approach, and a confirmation of its co-operative ethos.

Dairygold chief executive, Jim Woulfe, said: “I am delighted. This is an overwhelming vote in favour of our strategy, and a significant endorsement of our plan. We do encourage everybody at this point in time to consider their own expansion strategy.

“For those who were opposed to the plan, I would say that even though we have different points of view, we want everybody to feel included in this plan. We work with an open, co-operative ethos, and democracy was very much at play today.”

Of Dairygold’s overall 9,000 shareholders, around 2,000 attended yesterday’s vote. While less than 5% of these called for a secret ballot, the co-op’s board opted for a secret written ballot rather than a show of hands.

Some 1,930 voted on the first motion, the co-op’s governing committee’s call for an endorsement of the financial plan. Some 1,539 voted ‘yes’, 370 voted ‘no’, and 13 votes were spoilt. The other votes followed a similar pattern, backing the co-op’s expansion plan and endorsing its milk quality testing system.

Dairygold will now continue with its plan to expand processing capacity at its plants in Mogeely and Mitchelstown, Co Cork, including investing around €105m in installing two 7.5-tonne per hour dryers. Another €50m will be needed for working capital.

Yesterday’s endorsement will also be welcomed by the co-op’s banking partners, who have committed to a €250m long-term loan facility. Dairygold will only use this facility as and when required by its modular, phased expansion plan. Dairygold’s lead banking partner is Bank of Ireland. Its other banking partners are AIB, Ulster Bank, Rabobank and HSBC.

The shareholders’ endorsement also means Dairygold’s suppliers will now commit to bring their shareholding in line with their milk output. They will also make a 0.5c per litre contribution to the co-op’s revolving fund for any “new” milk they produce above their aggregate output of recent years.

The revolving fund contribution is effectively a loan given by the farmer to Dairygold in monthly deductions from their milk cheque over the next seven years. They will then be repaid this money plus a bonus over the following seven years.

Depending on personal situations and market conditions, some farmers may complete their revolving fund contributions within five years. In months where the milk price to suppliers falls to 27cpl, farmers will not contribute to the fund.