Ivan Yates: Why out-of-touch IFA can never go back to business as usual
The IFA is engulfed in the worst public confidence crisis in its 60-year history - it has been rocked to its foundations. Every step of the way, since Co Carlow chairman Derek Deane read out a six-page letter at the Executive Council meeting on November 4 proposing a resolution seeking transparency of accounts and remuneration, the IFA leadership has been behind the curve. It has been left chasing its tail to catch up with the breach of trust between its head office in Bluebell and its 88,000 members.
The rejection of that motion by 20 votes to seven (with 20 abstentions) revealed precisely how out of touch the collective officers and executives were with reality. The subsequent negotiations on the termination of Pat Smith's contract turned a crisis into a catastrophe. In fact, the mishandling of the affair was reminiscent of the Rehab revelations in the charity sector. At the core of this controversy is a cultural clash between a conglomerate of successful agribusinesses and the dedicated, loyal volunteerism of IFA farmers across the country.
The origins of the current crisis - how the most effective lobby group in the country came to such a pass - reach back to the mid-1960s.
The figure of Paddy O'Keeffe, a legend of Irish farming, looms large. Over the decades, he created and developed the Farmer Business Developments (FBD) insurance company and the Agricultural Trust. The former became a massive insurance corporation, the latter was the publisher of the 'Irish Farmer's Journal'. Both relied on the tens of thousands of farm families as their core customer base, and became highly profitable and successful. Both had their offices in the IFA buildings in Bluebell, Dublin 12.
As the dynamic Mr O'Keeffe aged and evolved, he cultivated his protégé Michael Berkery to enhance and secure his legacy. Mr Berkery was the IFA's chief executive for 25 years and was subsequently elected as chairman of the FBD group in 1996 and director of the Agricultural Trust. A Tipperary man with exceptional organisational skills and strong business acumen, he has, since the late 1980s, masterminded the IFA role in social partnership. He also inspired tremendous local loyalty to get thousands of farmers attending street protests; he glided between the farmers' mart canteen and the Taoiseach's office with equal effectiveness in both.
During his tenure, surpluses on the balance sheets were the norm and political deals securing benefits for the agricultural sector were also secured. He rewarded and incentivised success. He made sure to recruit the best personnel as executives - such as deputy secretary Bryan Barry and Kevin Kinsella in the beef sector.
Newly elected IFA presidents soon became totally dependent on Mr Berkery's strategies. There were good reasons for this - they were always the smartest plays.
As time passed, crossovers inside Bluebell became commonplace. Along the way, the IFA nominated directors to the boards of businesses and trusts that they had shareholdings and investments in. Bonuses were earned by the same staff doing different jobs simultaneously. Defined benefit pension scheme entitlements were accrued. The IFA is big business.
Complete professionalism was expected by Mr Berkery, while salaries were benchmarked with comparable posts in the private and public sectors. The salary of the general secretary was directly linked to that of the secretary general of the Department of Agriculture.
Close associates of Mr Berkery - including former public servants, food industry bosses, former presidents - became trusted non-executive external appointees to IFA-related entities.
This dedicated, no-nonsense approach undoubtedly reaped considerable benefits for farmers. Questions of transparency didn't arise, as the clique delivered impressive results.
Pat Smith had an impossible task, replicating Mr Berkery's many talents. His previous role was that of organiser - similar to the chief whip of a party. However, he had significant commercial successes in developing membership companies such as IFA Telecom Ltd.
The gulf between the lifestyles of these high-flyers and that of thrifty farmers had been building for decades. This week that chasm was laid bare for all to see.
Mr Smith and Eddie Downey are the first casualties, but this is only the beginning. New elections and executives will be required after an extensive purge of staff on six-figure sums. We still don't know what will emerge from the planned corporate governance review - and the ramifications of any further disclosures of mega-salaries.
Con Lucey, the IFA's former chief economist, never had to raise his voice to be heard when the IFA attended ministerial meetings. This quietly spoken, deeply knowledgeable man was always held in the highest respect inside and outside the organisation.
He has been a figure of quintessential integrity over 30 years - and his resignation as chairman of the audit committee, and the concerns he raised in his resignation letter, should have raised alarm bells. Instead, the concerns still need to be addressed. He chronicled the IFA's failure to heed recommendations to revise its annual accounts. This failure to adopt proper protocols produced a lack of transparency that proved calamitous.
The repercussions of all this are impossible to quantify.
The contradictions that existed during the Berkery era are unsustainable now. The underlying tensions within farmer representation have widened and deepened with CAP reform. The interests of large-scale professional tillage operators and tiny West of Ireland subsistence farmers can clash when it comes to product-versus-income subsidies and caps on entitlements; dairy and beef producers have opposing views on the pricing of calves.
What is required now is, first, a comprehensive breakdown of the €11.5m of annual IFA expenditures. Then, it needs transparent mechanisms of remuneration based on equivalent posts in other representative associations. Decision-making should not be vested in two key individuals, and external auditor oversight should be visible to branch members.
These are the mere norms of accountability within any democratic organisation.
But there's another quantum shift to be made: a cultural shift at the top to ensure a clear separation between the IFA and its agribusiness interests at directorship and executive levels.
Disentangling the apex of the organisation from its cash cows is likely to prove painful in terms of loss of perks and prestige. But real change is required. It simply can't be a case of back to business as usual at Bluebell.