Henchy makes Dairygold face up to reality
The 10-man board did not fare as well at the annual general meeting earlier this week and the vote of no confidence carried by 792 votes to 649 looks on the face of it to have been the crossing of the Rubicon by the owners of the business, namely the farmer suppliers.
The vote of no confidence was well engineered, or so it would seem, and the reality at this stage is the 10 board members had no choice but to step down.
Those of the board who feel they still have a role to play in the new era that arrived with the screeching of brakes as Henchy pulled up outside GHQ in Mitchelstown, sleeves rolled up, ready to whip the slumbering food giant into shape, can exercise due process and go back to their respective regions to seek re-nomination, if they think they can take the heat.
Given the press is excluded from co-op AGMs we have to rely on second hand information for what happened over the six hour long meeting - so much for openness and public accountability - it would be too easy to conclude that the AGM gave Henchy carte blanche while stitching it into the board.
That may be so. But a substantial number of those who voted on the no confidence motion voted against it and for the board.
So the view out there that the new Dairygold boss is going to get his own way without question from here on may be a bit premature.
The group produces seven products in four locations and has a raft of stores that cannot be justified.
Henchy was right when he described the co-op as a slumbering giant and he has to be given credit for setting the reform process in motion as rapidly so quickly, not that he had much option in reality.
If there was any doubt in the minds of farmers about his intentions they need only refer to yesterday’s papers advertising for a financial controller for the group.
Clearly the results last year were a nightmare for the group which decided to sell valuable IAWS shares to raise €6 million in order to pay farmers a price for their milk well above its market value.
Either those practices are wiped or the group will slide into a backwater and it will have blown the opportunity to become a dynamic profitable group with a big role to play in the evolution of the Irish food industry.
Such an achievement is in the best interest of farmer shareholders and they will be well advised not to confuse local issues about shop or store closures with the broader picture of being part of a highly profitable organisation.
Nobody knows better than Henchy that global markets are cranking up and that Brazil has the potential to become a major threat on the dairy side of the business.
There are no cold storage facilities for those making carpets too expensive to compete with similar quality product made elsewhere in the world. Let farmers in Dairygold ask the 400 people in Navan about that if they have any doubts about the reality of trying to survive in the unsubsidised real world.
But then farmers to be fair have been cosseted for too long by the policies of the EU that allowed unsustainable prices in the EU, not just Irish agriculture, to swim against the tide.
Well the bad new is that the tide has the potential to become a tidal wave and unless radical action is taken then Dairygold as we know it will not survive.
In fact Henchy’s unequivocal message is that Dairygold as we know it cannot survive unless it faces up to the realities of the local and global markets where cost efficiencies, backed by strategic marketing and clear product focus is the only guarantee of future success as the subsidies are eased out and global competition becomes the norm.
Dairygold may have a different mandate to Kerry or Glanbia who have to answer to the stock markets but it will not be able to deliver best value to its farmer shareholders unless it embraces many of the values deployed by Kerry and the other successful Irish food groups in Ireland.
Dairygold requires severe hatchet work and judging from the soundings after the AGM Jerry Henchy emerged stronger as the new chief executive and from a distance it looks as if he got the mandate required to do what should have been done a long time ago.
