Farm Ireland

Monday 19 March 2018

A crisis rooted in a culture of secrecy

The lavish payments to its former general secretary were just a symptom of the deeper issues in the IFA

Former IFA general secretary Pat Smith
Former IFA general secretary Pat Smith

Brian Leslie

The IFA is probably Europe's most powerful and influential farming lobby organisations, relatively speaking, and is probably the best resourced financially bar none.

However, the culture that has developed within this organisation over the past two decades has been the single biggest contributing factor to its current woes.

Irish agriculture has and will continue to need a well resourced and well run national farming organisation, representing all facets of Irish agriculture on both the national and international stage.

The IFA is ideally positioned to continue to service this undisputed need, but the association's current woes will not be resolved solely by changing the remuneration structures for its employees, electing a new president or ensuring the independence of its audit committee. The problems run much deeper than that.

Decision making

The big decisions have been increasingly centralised within the IFA under its two past general secretaries Michael Berkery and Pat Smith.

The organisation has become increasingly secretive and more commercially focused over the past decade, generating millions in revenue each year but to whose benefit? Is this in the interest of farmers nationally or its members?

What are the core objectives and values of the organisation today?

Also Read

Many feel that behind the well crafted press releases and photo opportunities, the fulltime senior management team within the organisation were overly concerned with financial targets and financial rewards.

While the organisation's presidents and volunteers across the country were solely focused on farming issues - and have and continue to do excellent work - its executive leadership team were some what detached from its membership base.

With annual revenues of a whopping €12.9 million (2014), where does all this money go each year? Net assets of the organisation peaked at €34m in 2007, yet two years later, fell to just over €9m.

While much of this decline in financial reserves is linked to the fall in value of publicly quoted shares held by the organisation, the high levels of annual expenditure, ranging from €10.4m in 2006 and peaking at €14.3m in 2009, needs detailed explanation if this organisation is to start afresh and regain trust.

As the table opposite indicates, the IFA is not involved in the production of any products or services, except IFA Telecom. Therefore its staff numbers and annual running expenses should be straightforward, modest and transparent.

For example, while it's a smaller organisation the ICMSA has approximately 13 staff and its annual running expenses are approximately €1.2m.

Around €9m has been transferred into IFA's staff pension scheme in recent years - this is in addition to the already very significant pension payments made by the organisation each year.

The IFA also receives payments from the FBD Trust and other agri businesses - these should be fully transparent and segmented in the accounts, especially the agri-business contributions. The IFA's income structure also needs to be reviewed.

Levies and income

The automatic deduction of levies by meat and dairy processors paid to farming organisations grows as these processors output increases. In the post-quota era this continues to add handsomely to the IFA's coffers but this structure is not necessarily in the best interests of it members.

Many rank and file members believe that the IFA HQ is too close to the meat and dairy processors and, despite the occasional blockades, are satisfied with the status quo.

In my previous career as a business journalist I reviewed hundreds of businesses' annual accounts operating within the farming and agri-business sector. The IFA's annual accounts were by far the most non-transparent of all accounts I reviewed, bar none. Their annual accounts were presented in a way that provided minimal information beyond consolidated headline figures that gave no real information and concealed what was really going on within the organisation.

What next?

Irish farmers need a strong, well organised, well run and democratic IFA. Farmers should not lose sight of this fact during this debacle. The new general secretary should, in my opinion be an external appointment.

The organisation's board or executive council should appoint suitably qualified, and experienced independent external candidates to sit along side elected farmer council members. All internal structures and reporting lines should now be reviewed by an external body.

Transparency must start with its annual report and financial accounts where income and expenditure lines are sufficiently detailed and informative for its core lobby activities.

Finally, the new general secretary is the person who will have the biggest influence on the IFA's culture and how it serves its members. Getting this appointment right will be critical in getting the organisation back on track.

Brian Leslie is managing director of Prima Finance and a former business editor of the Irish Farmers Journal email:

Indo Farming