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Friday 14 December 2018

Top analyst calls for two large farmer-controlled dairy co-operatives

Goodbody Stockbrokers' analyst Joe Gill gave his radical vision for farming at the fourth Butter Museum Lecture in UCC
Goodbody Stockbrokers' analyst Joe Gill gave his radical vision for farming at the fourth Butter Museum Lecture in UCC
Declan O'Brien

Declan O'Brien

An Irish dairy industry operated by two large farmer-controlled co-operatives, with the meat processing sector repositioned as high-margin protein businesses, was the radical vision for the future proposed by renowned food analyst Joe Gill.

Delivering the fourth annual Butter Museum Lecture in UCC, Mr Gill said the Irish food sector had underperformed when judged against traditional financial metrics.

While accepting that the Irish food industry had a "proud heritage" and delivered annual sales of €25bn, employed 200,000 and generated profits of €1bn, the Goodbody Stockbrokers' analyst questioned if it was properly structured to meet future challenges.

Mr Gill contrasted the performance of the 30 or so co-ops and private operators that make up the overall Irish food sector, with that of Kingspan, Applegreen and Kerry Foods.

He argued that the low returns delivered by the food industry generally explained why providers of investment capital were "not enamoured by large swathes of the dairy and meat industries".

Focusing his paper on how the Irish food industry could evolve over the next 20 years, and doing this through the lens of an institutional investor, Mr Gill challenged the industry to reawaken the "faded dynamism" of the 1980s and 1990s and to discard its "muted" ambition.

He proposed that the dairy industry should be collapsed into two large farmer-controlled co-operative processors, establish global R&D and product development centres in Ireland, and reposition the meat sector as global high-margin protein businesses.

Not surprisingly, the lecture prompted a lively but good-natured debate among the great and good of the food industry who attended.

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