Henchy’s milk price aim
He told 2,575 shareholders at annual and special general meetings in Mallow that the Society has returned to operational profitability.
Both meetings were a triumph for the co-op's leaders, with shareholders overwhelmingly adopting a new rule book and voting confidence in the directors (only eight votes against).
It was a big disappointment for shareholders known as the Option B Group, who had intended moving a vote of no confidence in the directors, including a call to have them removed from office. They also wanted the rule book rejected.
This group, along with Deputy Ned O'Keeffe, a member of the co-op's general committee, criticised the procedures adopted at the meetings. Dairygold rejected these complaints, saying the democratic wishes of the shareholders were loudly reflected in the conduct and outcome of the meetings.
Mr Henchy said, "A return to operational profitability in the short term is not nearly enough if we are to survive and produce sustainable profitability from the business."
He said Dairygold has successfully reduced its cost base. Loss making beef businesses have been sold, transport services out-sourced, and it has changed the structure of the business.
On milk processing, he said, "We will benchmark the investment required by reference to the return on investment, whether it is by way of investment in one or more of our own dairy processing facilities, or investment by way of co-operative joint venture with one or more of our neighbouring processors."
"We will move without pride or prejudice to do what is best for Dairygold so as to be in a position to maximise returns from our milk pool and to return as quickly as is possible to paying a Division One milk price".
Mr Henchy said Dairygold is also looking at how to reduce costs in their pig processing. Enterprise Ireland studies have clearly shown that pig processing costs in Ireland are significantly higher than in Holland or Denmark, where factories handle 30,000 pigs a week.
The combined Dairygold, Glanbia and Dawn Meats pig processing operations each kill about 10,000 pigs a week. Mr Henchy said that in both dairy and pig processing, labour cost is a big consideration.
Within the next five years, he said, Dairygold will, in essence, be made up of two entities. The first will be the core milk processing and agri-services businesses, remaining farmer owned and controlled, in the co-op model, but operating to best international practices.
They will bring most value to their farmer owners, based on prices paid and quality of services, when compared to their global competitors.
Alongside that business will be a major consumer foods business operating across the two islands, Ireland and Britain. This will be a business of real scale, with turnover in excess of €500m.
"In growing this second business, we will employ a number of strategies. We will seek to broaden our current branded offering. We will enter new growth sectors.
"We will continue to grow our business in the British own label spreads and cheese markets. We will bolt on British acquisitions if appropriate. And we will examine strategic Irish partnerships. We will also seek to fully utilise our Welsh cheese packing plant, which is among the finest in Europe.
"We will continue to grow the Horlicks Prepack cheese brand, and we will work to broaden cheese eating formats, through the Xtreme cheese brand."
Mr Henchy said co-operation with erstwhile competitors will be vitally important, as the industry as a whole seeks to drive down costs. "If this means sharing processing and production facilities or distribution channels in Ireland and Britain, then so be it.
"Where such collaborative or joint venture arrangements prove impractical, we will look at suitable acquisitions, which make a good fit with both our current business and our vision for the future," he said.
