Industry must evolve as EU price supports are reduced: Henchy

ASKING Cork and Kilkenny to field a joint hurling team is like seeking a merger between dairy companies that are traditional rivals, said Dairygold Co-op Chief Executive Jerry Henchy last week to the Irish Grassland Association conference in Limerick.

"We must never underestimate the key and central role which local co-ops have played in their communities over the past century and more. For the shareholders and managements of these entities to participate in a wide scale rationalisation or consolidation of the industry is asking a lot", he said.

"However, I do not subscribe to the 'divided we stand, united we fall' mindset of the cynic", said Mr Henchy.

"I believe that farmers today and the boards that represent them have moved far beyond parochial issues. They are becoming focused on ensuring that positive change occurs to mitigate the effects of reducing EU supports. I accept that we are only getting out of our chairs, and we certainly have not started to tango yet. However, the Irish dairy industry is neither young nor without history and roots, and it would be unrealistic and indeed perhaps unhelpful if evolution of the industry was to occur too quickly."

Putting aside "past failures or rivalries and the power of interest groups", he set out how to maximise the competitive position of those who milk cows.

The ideal, according to Mr Henchy, would be a small number of strategically placed scale commodity sites with their own sales arms; development of some smaller sites to cluster non-commodity products, if they do not fit best alongside commodity sites; targeted markets for emerging products; and sale of non-core assets, or their return to the original stakeholders, to be managed outside of the milk processing structure.

Control of the industry would be driven by how "Dairy Ireland" progresses away from commodity towards lifestyle health orientated ingredients.

"There is room for a stock market and farmers if there is a path of growth. There is room for farmers only if we remain in non-growth, non-intellectual property type products", he said. But Mr Henchy admitted that speaking of a single strategy for the Irish dairy industry was a complete waste of time.

"You cannot develop a strategy for a series of fragmented businesses with separate ownership and management structures", he said.