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118th Annual Report & Accounts 2012 ICOS Dairy Committee..................................................................................................................................................................4 Work of the Brussels Office..........................................................................................................................................................5 Milk Quota – National Position....................................................................................................................................................6 IMQCS & Milk Quality...................................................................................................................................................................6 Livestock Marts..............................................................................................................................................................................7 Member Development...................................................................................................................................................................8 Rural Business Development Committee..................................................................................................................................8 2012 International Year of the Co-operatives.............................................................................................................................8 Plunkett Award for Co-operative Endeavour..............................................................................................................................9 Co-operative Governance..............................................................................................................................................................9 IFCD.................................................................................................................................................................................................9 Board ............................................................................................................................................................................................10 Membership of Expert Committees..........................................................................................................................................10 Finance & Governance Sub-Committee....................................................................................................................................10 Chairmen of Expert Committees ..............................................................................................................................................11 ICOS representatives on Brussels Based Committees..........................................................................................................12 ICOS Skillnet ..............................................................................................................................................................................13 Pensions Administration............................................................................................................................................................13 1 With the likelihood of increasing volatility post quota, it Without some structure in the is perhaps also time for co-operatives to re-examine their marketplace to protect their pricing models to ensure better risk management and interests, farmers would be income stabilisation. Outside of Ireland, a number of the seriously disadvantaged as larger dairy processing co-operatives have a policy of buyers and sellers. Where paying an indicative monthly milk price assessed farmers have little or no objectively against a basket of peer dairy processing influence in the ownership and co-operatives. This is then supplemented with a control of a firm, the owners “thirteenth month” payment at year end as an agreed can set prices to the proportion of the profits generated by the co-op in that disadvantage of those farmers. year. Irish co-operative performance - including the milk An effective co-operative - if operated at cost and price paid to farmers - has to be assessed on a like-for-like effectively controlled by farmers and management - basis with peer companies selling and competing in the brings the benefits of economies of scale and maintains same international markets. market competitiveness for the co-op members. Co-operatives have made a hugely effective contribution The year gone by has been a demanding one for marts to the Irish economy, inspiring and promoting the and their customers. Bad weather made for poor on farm development of an efficient and modern agricultural performance by stock and new regulatory requirements system, including a milk processing sector that brought challenging times for marts. compares very favourably with any in the world. Co- Co-operative marts were faced with the enactment of the operatives espouse certain values and principles which Property Services Regulation Act this year. This has are different from other firms. A summary of these increased the regulatory burden on marts considerably. values & principles is included in this years Annual While many of the requirements in the legislation will Report. have a long term positive impact on livestock marts, in Over the years, agricultural co-operatives have modified the short term, the measures introduced in the Act their structures and methods of control and financing. represent a cost and administrative burden on a business Some have adopted hybrid forms, sharing the investment model that operates at minimum cost on very modest risk with external investors. Some have formed ‘new commission charges. generation co-operatives’, limiting open membership. Notwithstanding, these short-term challenges, the longer Some have applied financing and supply commitments. term challenges of restructuring what is a low margin 2012 was a year in which Irish dairy co-operatives re- co-operative sector remains a key challenge for mart examined their own structures, milk supply agreements boards. ICOS supports further consolidation and and financing arrangements. While this generated a rationalisation of our co-operatives, in the livestock mart certain amount of controversy, it was a good thing, as too sector particularly where this enhances competitiveness many farmers take the existence of their co-operative for and brings benefits for farmers. granted. Each generation should examine the arguments that justify the existence of their co-operative and make up their own mind as to the economic merits of a In the context of less sheltered markets, which the next co-operative business. generation of farmers will have to contend with, the need for strong co-operative structures will be more vital than ever. Competition is now global and our competitors - The ending of quotas in April 2015 is projected to create both co-operative and investor-owned - are building world a surge in milk supply in the next decade. Security of scale businesses. Those who believe in co-operation also processing capacity and market outlets will be a key believe that its benefits will persist and grow. Co- priority for farmers, where there is unrestricted supply. operation has created a heritage of success that we can While some might see squeezing the last cent per litre all be proud of. With renewed farmer involvement and from processors as the key goal, this ignores the far interest, it can continue to create a bright and prosperous greater importance for the supplier, that he has a long future for this generation and those who follow. term and secure outlet with the capacity both to process and market all his milk. In a co-operative, if the schedule Since the last Annual Report Lexie Tinney, a loyal and of raw product delivery can be reliably planned, then a active co-operator, former ICOS Board Member, constant and reliable flow of product allows processing Chairman of the ICOS Dairy Committee and Chairman facilities to operate at a minimum cost, yielding better of Glenveagh Co-operative and Donegal Creameries PLC returns. There is an added value to be achieved by loyal passed on to his eternal reward. milk suppliers in committing to supply an agreed volume of milk, of the required quality and at a given time, to their Ar Dheis Dé go raibh a anam. co-operative. This helps in planning the scale of plants and related investment needed. Bertie O’Leary President 2 2 With the imminent ending of Since 6th June 2012, the livestock marts auctioneers quotas, Irish co-operatives are licence are now regulated under a new Act and a new entering a new and exciting Authority. The Act is called the Property Services phase. We have so much in our (Regulation) Act 2012 and it applies to all property-related favour; the industry is still in transactions, including the sale of livestock. The the hands of Irish farmers Authority is called the Property Services Regulatory through their co-operatives; we Authority. This new authority now has the power to grant have a sustainable grass- or revoke auctioneers licences to marts. A number of based farming system, and changes that have now been imposed by this new world population and food authority will result in some changes in the manner in demand projections are which marts do business. These new regulations place growing. even tighter controls on marts, giving even greater In 2012, ICOS worked with our co-operative members to protection

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