Executive payments a bombshell for farmers
Published 21/04/2016 | 02:30
As the incomes of dairy farmers collapse, the news that nine Ornua executives were paid an average of over €1m in remuneration over two years comes as something of a bombshell. While chief executive Kevin Lane has claimed "full transparency" on the payments, we do not actually know precisely how much each individual was paid.
He also claimed that they had been benchmarked against industry peers. They clearly were not benchmarked against the farmer who must work seven days a week to produce milk which barely covers the cost of production.
As such farmers struggle to survive after an annus horribilis given the flooding crisis, these huge sums are likely to make eyes water in families all across the country.
Dairy is a major industry for Ireland, with exports valued at €3.24 billion in 2015. And Irish dairy production is also expected to increase by 50pc to more than 7.5 billion litres by 2020. But these figures mask the struggles of dairy farmers, who are up against plummeting prices due to an international glut in supply. Many also heavily invested in their farms, betting on the lifting of quotas to boost demand, whereas the opposite has taken place. This is the context in which these enormous payouts will be seen.
New accounting rules have obliged the country's premier dairy co-op to publish details of executive pay for the first time. Ornua recently acknowledged the crisis farmers are facing, announcing that it is to suspend its milk levy from May, specifically as a result of the collapse in dairy prices. The necessity to do so further suggests that the exorbitant payouts to executives could be regarded as less than appropriate. Ornua said: "There is an urgent need for global supply constraint and any recovery of demand will be dependent on the Chinese economy, improved oil prices, and the lifting of the Russian ban."
Once more, given such exceptionally difficult challenges, it is pertinent to question the wisdom of such huge payments.
"We are confident that, whilst recognising the challenging market conditions that exist, our business will continue to deliver strong returns and growth, thereby enhancing value for the farmers we represent," Ornua said.
Payments of €9m to a group of executives certainly constitute "strong returns" to those concerned, but hard-pressed farmers may choose to describe them in less ebullient terms.