Dairy market future puts IDB into question
With the dairy industry going through such dramatic change perhaps it is time once more to ask basic questions as to that the role of the IDB should or ought to be in order to deliver the best service to the sector into the future.
Critics of the IDB such as Jerry Henchy of Dairygold and Ed Prendergast of Lakeland have argued its role should be scaled back.
Their basic argument is that the Irish dairy interests will be best served by top class research and development and by serious rationalisation.
IDB holds serious funds on behalf of its investor co-ops which stood at €325 million by the end of last year.
What has been happening, or more to the point, not happening, to those funds is an issue not just for the IDB and its backers, but for the entire diary sector.
Research & Development is vital to the future success of the sector.
From Jerry Henchy’s perspective it was logical he should argue that the cash pile in the IDB would be given back to the co-ops to allow them to get on with re-directing their businesses into areas capable of meeting the international challenges.
It can be argued that R&D has hardly been the IDB’s strong point. That may not be its fault. But if memory serves the Kerrygold brand, its keeps trumpeting on about, goes back to 1964 and was the brainchild of Tony O’Reilly better known today as the boss of Independent News and Media.
In typical Irish fashion, once Henchy had broached the topic farmers insisted any monies coming back form the board would have to go directly to them.
Trust Irish farmers to take the long term view as always.
This debate on IDB goes to the future strategy for the Irish dairy sector.
And the future role of IDB is as good a peg to hang the debate on as any other.
Apart from contributing little by way of top branded products it seems the board has been synonymous in maintaining the status quo in Irish dairying, by default or otherwise over the years.
The small co-ops dotted across the country rely on IDB to move their bulk product and it pays within seven days for goods sold into intervention, a point not lost on the bigger players in the market when it suits them.
We are fast moving to an era of having to be competitive on international markets.
That has been Jerry Henchy’s war cry since taking over at Dairygold and he has been consistent in that. It’s time the likes of Henchy and Prendergast were listened to and for the dairy industry at large to wake up to the threats and challenges ahead.
A full open debate on the role of the IDB would be a great catalyst in trying to determine a cogent food strategy to carry us into the future.
In that context we have to ask if the IDB, as presently constituted, is core to that strategy and if not how it should be re-defined to meet the shifting needs of the sector.
Jerry Henchy argues it should go back to do being a cheap efficient clearing house to dispose of Irish dairy commodity products, devoid of large overheads and an expensive infrastructure.
Last year over half of what it sold was non Irish, and presumably that is what Henchy is on about.
Of €595 million dollars worth of goods sold in the US last year by the board’s distribution group only €20m was Kerrygold branded product and much of the rest wasn’t even Irish made.
If that’s what we need the IDB for then so be it.
With pressure on the dairy sector to win market share by developing new top quality consumer products perhaps it is time for a basic re-evaluation of what the IDB is supposed to be about.
