Talks begin on Dairygold’s future
Under discussion is the possible splitting of the consumer division, the 4Homes DIY stores and property development into an unlisted plc, to drive this business forward and generate future dividend income.
Taking that end of the business to the stock market has been ruled out for now, although chief executive Jerry Henchy had indicated early on that the option of a future listing was open for consideration.
Critical in the dialogue with shareholder committees is maintaining the dairy operation, agri-trading and farm services under the co-op banner. Farmers believe their best interest can only be served by retaining the co-op structure for the farming aspects of Dairygold’s business.
They are concerned borrowings needed to drive the consumer and other non-farming sections would conflict with milk price.
Dairygold is determined not to let that happen and is understood to be considering a ‘one society, two businesses’ approach, which Mr Henchy indicated was a way forward for the group shortly after taking on the role as chief executive.
At the end of this process, if shareholders were to approve a restructuring, the dairy interests of the group and farm services including agri-business would stay in the co-op structure.
Dairygold surveys have highlighted serious farmer concern about the future of farm incomes, with well over half saying they will not be active in agriculture in 10 years’ time.
Of these, 27% said they intended staying in farming for five years and a further 26% will be gone within 6 to 10 years.
It is a major concern that 40% of farmers over 65 have no successor or no one interested in taking over their holdings.
At present, Dairygold has about 8,400 shareholders, 77% of which believe the co-op structure is the best to buy products such as milk and grain. The dialogue to find a way forward has been prompted by the survey findings which show that 61% of farmers who took part said the group should find alternative ways of funding the non farming aspirations of the group.
The group has serious plans to develop the 4Homes division and it also has ambitious plans to utilise the huge amount of land spread across the Munster region.
Plans to acquire a key consumer food group steeped in the nutritional/health end of the business are seen as a prerequisite to driving the consumer business, where margins are under severe pressure in the more conventional parts of the business.
