Farm Ireland

Saturday 23 March 2019

Processors using All-Ireland tickets as bait to lure farmers away from producer groups

IFA conference told collective approach 'doomed to fail' if members don't commit fully

File photo
Claire Fox

Claire Fox

Producer organisations (POs) are doomed to fail if farmers can be tempted to break ranks by the promise of All-Ireland tickets from processors, a leading agri solicitor has said.

Dublin-based solicitor Jim Staines told an IFA conference that the problem of farmers breaking ranks and not being fully committed is the main factor in POs disbanding.

"I was talking with someone last week and they described their experience of a producer organisation a few years ago. There was a small number of them, it was going really well, but there was one member of the group who wasn't that committed to it," explained Mr Staines.

"He had another off-farm income and he wasn't particularly pushed by the whole thing. The processor's arm was around him, gave him a quiet word and a ticket to the All-Ireland, and he walked away from the group and the group dissolved."

At present, there is a requirement for members to supply 75pc of their product through their PO, but Mr Staines pointed out that this isn't strictly enforced and, instead, an obligation to supply 100pc should be implemented to fully tie farmers in to the PO.

"You have to make it so attractive that somebody will supply up to 100pc of their product through the PO because everything else they get, in terms of knowledge transfer and expertise, is better.

"Farmers need to be tied in so tightly into POs and there should be an obligation that they cannot supply to anybody else, and if you do supply elsewhere, the group will penalise you.

"There's also the carrot and the stick approach that you make it so attractive and you become the group everyone wants to deal with," he said.

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IFA sheep chair and member of South Mayo Lamb PO, John Lynskey, added that his group has had major difficulties fending off "processors trying to destroy and control groups".

He also said that the €3,000 offered from the Department to establish the PO isn't sufficient as all of the work completed by farmers is done on a voluntary basis.

Department of Agriculture official Valerie Woods told delegates that at least 20 members are needed to start a PO, but in cases where the geographical area doesn't permit that number, the group can seek a derogation from the minister.

PO facilitators provide farm business planning advice and legal guidance on the establishment and recognition of a PO as a legal entity, which is a requirement of the EU regulations.

There is funding of €3,000. Once established, the PO has to apply to the Department for recognition and then they report annually to ensure the PO is being run within the regulation.

Under EU Common Market Organisation Regulation, recognised POs may benefit from certain exemptions from the competition rules, eg collective negotiations on behalf of their members, and have access to funding, eg to operate certain programmes on behalf of their members.

Bargaining power

While Mr Staines said this doesn't give POs "carte blanche", he said it can provide a platform for increased bargaining power in negotiations.

He added that Associations of Producer Organisations (APO) can also be formed to allow a group of POs to come together under an umbrella to strengthen their negotiating platform and consider outsourcing some of the administration work.

"You've seen today the amount of work that goes in to a PO. It's a bit like somebody said to me before, that farm partnerships are just about opening up a bank account but to have it working properly, you need a working agreement and the roles of everyone involved. POs on a slightly bigger and more complicated level are the same thing.

"They require strong commitment. Outsourcing a lot of the administration work allows farmers to get on and do what they're best at and bring in other expertise."

Indo Farming