Dairy farmers could receive shares worth €100m if a proposal to restructure Ornua gets the green light.

The Ornua board, which owns the Kerrygold brand, is considering a proposal it received from Dairygold to restructure Ornua from its current co-op structure to become an unlisted plc.

If passed, the proposal would see its 34 existing member co-ops own 80% of the new entity and eligible dairy farmers the remaining 20%.

With Ornua currently valued at around €500m, farmers would be allocated shares to the value of €100m, while the member co-ops would receive around €400m in shares.

Each of the 13,500 farmers supplying Ornua member co-cops would be in line to receive, on average, shares valued at €7,500, which could be traded on an internal market.

The new board structure would include more independent board members. Both Dairygold and Ornua declined to comment on the details of the proposal.

A spokesman for the ICMSA, which has a seat on the Ornua board, said it was obliged to respect the confidentiality of board discussions, but it was evident that some form of reorganisation was being considered and the merits “or otherwise” were being closely looked at.

“Individual co-ops will always consider their individual positions – and that’s right. But it’s up to the farm organisations to transcend individual or specific co-op or processor concerns and do what’s right for the whole category of dairy farmers,” he said.

Direct benefit

“On the question of a spin-out to farmers, I’d only point out that ICMSA has always looked at some form of direct farmer shareholding or direct benefit, particularly in those situations where the sector at corporate level seems to be doing well on the back of weak farmer milk price,” he said.

The IFA said it was “regrettable that the confidentiality of the process was breached”. It added: “At this point, it is important that the board is given the space and time to evaluate all options in the manner they deserve, in the best interests of the Irish dairy sector.”