Farmers and boards fable debunked

Readers of a certain vintage might remember that almost 40 years ago Irish Meat Packers (IMP) finally decided to exit beef processing. The decision was hardly a surprise to farmers; the business had been struggling for years.

IMP was a co-op, an arm of Cork Marts, and the decision was a serious reputational blow to the co-op movement, still reeling from the collapse of the other farmer-owned meat processor, Clover Meats, in 1984.

The fanfare which had accompanied Cork Marts’ purchase of the country’s largest meat processor in 1969, when around 25,000 farmers were encouraged to invest a massive £3.3m, stood in stark contrast to its meek exit from the sector 16 years later.

Commenting on the slow demise of IMP in September 1985 the Cork Examiner questioned the ‘advisability’ of having majority farmer representation on the board of the business.

“Farmers by their nature are producers of raw materials. They have not got the marketing experience for an enterprise of this magnitude,” the newspaper pronounced.

The Dealer was reminded of them over the last fortnight as the full extent of the wealth transfer flowing back to shareholders and farmers as a result of Kerry Co-op’s decision to purchase Kerry Group emerged.

The figures are staggering. The latest Kerry Group share spinout is worth €1.1 billion to Kerry-based shareholders and over €400m across the rest of Munster.

Remember, that €1.6bn is only the latest transfer of wealth in the form of plc shares from the co-op to its shareholders. The grand total is many more billions of euros worth of plc shares. Nobody could have predicted the massive success of Kerry Group back in 1985. And similarly, nobody could have forecast the later success of Glanbia.

However, both enterprises have been hugely successful, have delivered massive benefits for rural Ireland, and – whisper it – grew out of farmer-owned businesses.

Both Kerry and Glanbia’s Irish dairy and agri-businesses have now been bought back by the co-ops. There is poetry in the fact that the original motherships, which all the plc wealth was built on, are now back in control of their own destiny.

Will this generation of farmers run their businesses as well as those who went before them? Can Tirlán and whatever Kerry will become known as work their magic once more and provide the springboard from which successful multi-national food businesses develop? Who knows? Maybe they’ll be lucky and stumble across the next Denis Brosnan or John Moloney. Only time will tell.

As the experience of Kerry Group and Glanbia attests, farmers clearly have the ability to help successfully guide enterprises “of magnitude”.