Coming full circle

“I have enjoyed the job. It’s a bit like farming,” Jim tells me. “You don’t look at it as a job. It has been a privilege and has been my life for 40 years.” As a ‘lifer’ starting out with the original Avonmore and then Glanbia and finally Tirlán, the Kilkenny native acknowledges the changing face of the organisation across the four decades: “I joined Avonmore as a graduate in 1984, having completed a Bachelor of Commerce in UCC. It’s worth remembering that half my class left Ireland to find work at the time, so it was great to get an opportunity so close to home.
“I did experience a workplace outside of Avonmore when, after further part-time study, I took on a role in another company. After a year, I returned to Kilkenny, and I have been with Avonmore in its various guises since then. It was a realisation of the quality of the company and the workplace that drove that decision to return. Even though there was a lot of travel involved in my roles over the years, I never had to relocate. I spent 25 years working in the manufacturing plant at Ballyragget, almost in view of the home farm and it was part of my existence from the time it was being built.”

Shaping a new dairy structure

The 1980s were a time of change in the Irish dairy sector and Avonmore took part in that evolution, Jim explains: “When I joined the organisation, Avonmore was a co-operative entity, owned exclusively by the milk producers. In 1988, it became a Plc and 34 years later, in 2022, we transitioned back to being a fully fledged co-op. The huge achievement in that time was the wealth creation on behalf of farmers, amounting to around €2bn; €900m has been transferred out into individual farmers' accounts with another €1.1bn still held in collective ownership in the co-op’s balance sheet,” he explains, adding that great credit is due to people who had the vision to make the decisions that delivered the wealth.
“I would reference Pat O’Neill, Stephen Walsh, John Duggan and Johnny Dowley among them. As we know over the years, the Plc and the co-op haven’t always been easy bedfellows because there is an objective from a farmer-shareholder perspective and a different one from the Plc standpoint. There was always that bit of angst between the two, but the entire structure still worked well,”
he says.
Now, the focus is simpler: “We have become a co-op again, with a new name and brand image. During January we completed our annual round of meetings with our co-op shareholders and my general reflection is that the conversations and debates are singular in nature. Management attitude is that whatever profits we make, we retain a modest margin of around 1.5 per cent and everything else goes to the farmer shareholder, through milk and grain prices and supports as well as shareholder dividends. It is a simpler model and reflects the ethos of a co-op, which has a singular function to serve the needs of its shareholder suppliers and members. The meetings with our members are a valuable refresher course for management. The chemistry of meeting and discussing the challenges being faced everyday by our suppliers is hugely important.”

Doubling output

“We have a business with an international remit that is owned and directed by its co-operative shareholders. Since 2010 we have expanded our processing capacities in anticipation of the abolition of quotas. In tandem with that, in 2013, the first stage of the return of our Irish dairy processing assets into cooperative ownership took place. Milk output on Tirlán farms has expanded by 95 per cent since 2015 with the processing capacity expanded to deal with that. The organisation spent €600m during that period. Despite that, we have borrowing levels similar to 2013. Additionally, in 2017, the co-op gained full control and ownership of the agri-trading and consumer business sectors of the business. Finally, in 2022, full co-operative ownership was achieved.”
Jim believes that the co-op model is the best structure for farmers. “In a world that is very volatile and challenging, having a single agenda is very important.

The Plc structure worked well with the likes of Siobhan Talbot and John Moloney providing strong leadership and business expertise with a global perspective. The development of a nutrition focus has added enormously to the value of Glanbia Plc. At this stage we have two head offices in Kilkenny with two global organisations and a lot of wealth created for two distinct sets of shareholders. Most of the people in Tirlán have experienced the business disciplines of a Plc culture and that discipline equips them well to achieve and deliver in a co-operative structure. Strategy and operations can be managed in the manner of a Plc but with a co-operative ethos. The interface with our farmer members must reflect that co-operative culture.”

Local connections

As well as being a global-facing international dairy business, Tirlán retains its local affinity, something Jim is particularly pleased about: “We retain that relationship, nowhere more so than in our sponsorship of Kilkenny GAA. It’s a 30-year relationship at this stage, almost unheard of in sponsorship commitments. The sponsorship reflects the nutritional benefits of dairy products for athletes and delivers a high-profile marketing opportunity for Tirlán.
“Belview is being commissioned and will be a major benefit for Tirlán in the years ahead. It is expected to pay out upwards of €120m annually to milk suppliers.”

Consolidation needed

“The natural evolution, as we have seen previously, is that consolidation will continue to be a part of the Irish dairy story. The strongest take over the weakest at its most extreme. Compared to global experiences in the dairy sector, Ireland has not consolidated at the same pace as other countries. The Dutch and Danish experience has seen one organisation now controlling 80 per cent of the entire milk pool in those countries. Scale is important. I think that, over the past 10 or 15 years, we have come through a period of very slick supply chains, and technology has made the transport and monitoring of supply very efficient. In the past two years that model has come under pressure from wars, epidemics and political upheavals across the world. That makes it difficult for businesses, be they processors or producers, to achieve their aims and ambitions. The stronger the structures in those situations, the more opportunities present themselves. Weaker entities are more at risk. I would prefer if the Irish dairy industry had greater scale and was able to dominate some markets internationally.”