One of the themes at the recent COPA-COGECA Congress of European Farmers in Strasbourg was the cooperative. It was introduced by Jerry Henchy, CEO of Ireland’s Dairygold Cooperative Society Ltd. He was strongly opposed to the way other cooperatives treated their productorientation. He thought they were far too concerned about the latest prices for their members rather than about what consumers really wanted.

 

He praised his own cooperative’s new structure. The real added-value activities – the most profitable branded products – have been transferred to a separate limited company, leaving the other, less profitable activities behind in the cooperative. Individual members hold 75% of the limited company’s shares and the cooperative holds the remaining 25%. The limited company will be listed on the stock exchange in the near future. Henchy explained why this structure had been chosen: “To run a consumer-driven and profitable business, the members have to take a step back and hand over management and supervision to professionals. It’s in their own interests.”

 

When you hear something like that you have to ask yourself what made Dairygold’s members so short-sighted to take such a decision. Sell off the most profitable activities and wave goodbye to their ownership rights! It is a pity that there is so little contact between farmers in different sectors and countries. Dairygold’s members could have learnt a thing or two if they had first spoken to the members of the Dutch Sugar Beet Federation. They might have realised that shareholder interests are completely different from member/supplier interests. You might think you have an absolute right to sell your products but, when it comes down to it, there simply aren’t any guarantees.

 

The focus on the market has to be tied as closely as possible to the members’ interests. Executives and supervisors have to be chosen from among the members to make sure the ties remain strong. Ties based on ownership, voting rights, shares in the profit and something such as consumer-driven product quality. It completely escapes me why members should not be able to vote for profitability yet not enjoy the benefits of excellent executives and supervisors who have a wealth of business experience.

 

Dairygold’s solution is completely at odds with the Dutch philosophy. We make sure that our executives and supervisors are fit for their tasks. We appoint directors who have that little bit extra so that they can serve both the business’s interests and the members’ interests. If you can’t combine the two, you should not be surprised if your customer suddenly turns to another supplier. Or simply sells his business. Because of the shareholder value. Only a cooperative has the ability to combine the two. It’s as simple as that.

 

 

Gert van Dijk

Director of the National Cooperative Council