Irish agricultural co-operative modelling and remodelling: Responding to a dynamic business and policy environment

The agricultural business and policy environment in Ireland has shifted considerably in recent decades, particularly in the context of the introduction in 1984, and proposed abolition by 2015, of the EU milk quota system. The milk quota system allocated a national milk quota in each EU member country together with individual quotas for milk producers. This means that if a producer produces more than his or her allocated quota, a super-levy (or fine) may be payable. The imposition of milk quotas was a powerful impetus for agricultural co-operative remodelling in Ireland in the mid-1980s and early 1990s, together with other factors such as a high proportion of ‘dry’ shareholders (non-user shareholders) and failure to distribute profits according to use, with a consequent high proportion of unallocated equity capital. This, in turn, led to reluctance on the part of the farmer shareholders to invest in the growth of the co-operative. Many of the larger co-operatives at that time moved towards a Public Limited Company (PLC) structure. The PLC structure involved the exchange of the bulk of the co-operative assets for a majority shareholding in a newly created investor-owned firm (Jacobson and O’Leary 1990). The PLC structure was and still is used as a vehicle to raise finance through the stock markets. The co-operative ownership in the PLCs has gradually declined over time, resulting in a significant reduction in the control of the co-operative shareholders in their business.