Co-op war erupts

By Paul Mooney and Des Maguire

NEWLY formed Connacht Gold Co-op has made a last minute bid to prevent the merger of Midwest and Nenagh co-ops into the planned Arrabawn co-op.

In a statement issued yesterday (Wednesday) its chairman Dan Gilmartin said Connacht Gold would be very willing to talk directly with any Midwest members or milk suppliers who might want to pursue merger with Connacht Gold.

The offer of merger talks was put to Midwest Co-op representatives last month but there had been no response, he told the Journal. The suggestion was made at a special meeting of Shannonside Co-op which is jointly owned by Connacht Gold and Midwest. ``They said they would go back and talk to their own board members but we have heard nothing,'' Dan Gilmartin said yesterday.

The sudden move by Connacht Gold follows this week's formal announcement that members of Midwest and Nenagh co-ops will be asked to begin voting on merger on Monday, December 11. Connacht Gold itself was only formed last week following the successful merger of the other two Western co-ops, NCF and Kiltoghert. In the late 1980s attempts to merge the three Western co-ops collapsed.

Approval next month to merge Midwest and Nenagh would create a new co-op with a milk pool of 51 million gallons of manufacturing milk and four million gallons of liquid milk. It would result in a restructuring of the two co-ops' butter manufacturing and liquid milk operations aimed at generating savings and maximising returns for farmers from the expanding Galway market. There would be overall investment of some £2 million in liquid milk processing, packing and dispatch.

The announcement that negotiations had concluded was made by ICOS chief executive John Tyrrell who was speaking on behalf of the boards and management of both co-ops. The ICOS man piloted the negotiations between the two co-ops since early this summer.

Connacht Goldbid to block Arrabawn

In the statement he said documentation was now being prepared and would be sent to shareholders of both co-ops by Thursday next, November 16. Information meetings on the proposals would then be held in both co-ops followed by special general meetings in both co-ops for voting.

If Midwest and Nenagh merge the resulting 55 million gallon milk pool would be larger than Connacht Gold's 48.5 million gallons and would approach Lakeland Dairies' 60 million gallon manufacturing milk pool in the Republic.

Midwest shareholders would be required to vote separately on distribution of reserves of over £3 million. This vote would be open to all 3,000 shareholders. Only the 600 milk supplier shareholders would be entitled to vote on merger proposal itself but all shareholders would be eligible to become shareholders in the merged society.

It is understood the merger proposal includes the following with a two year transition period allowed.

* all liquid milk processing and packaging - around four million gallons - would be centralised at Kilconnell.

* a new plant capable of processing 10,000 gallons daily plus 3,000 gallons of cultured buttermilk weekly would be built there.

* a new liquid milk dispatch store would be built at Oranmore to service the Galway market. Investment in Kilconnell and Oranmore would be £2 million.

* existing liquid milk suppliers of both co-ops would supply Kilconnell.

* Oranmore and Nenagh brands would continue.

* manufacturing milk from Kilconnell area and north of it would continue to be assembled at Kilconnell.

* manufacturing milk south of Kilconnell would be assembled at Nenagh.

* all butter making would be done at Nenagh. Summertime manufacture at Kilconnell amounting to about 3,000 tonnes would stop.

* additional manufacture of premium price Kerrygold lactic butter in May to August period at Nenagh.

* the two milk pools ring fenced.

* overall, re-structuring aims for savings of nearly £1 million or 1.8p per gallon.

* Savings would centre on butter making, carriage and administration.

* liquid milk lab would be centred in Kilconnell.

* TBC testing of manufacturing milk at both Kilconnell and Nenagh.

* All testing for fat, protein, SCC and milk ring would be centralised at Nenagh.

Only active milk supplier shareholders or actively trading shareholders would be eligible for membership of the boards of the new co-op. The outer board would consist of 63 seats, 24 for Midwest and 39 for Nenagh. The inner board would number up to 16 seats.

Senior positions in the new co-op would be decided by vote at its first board meeting. Reflecting the size of the two co-ops it is likely that Nenagh chairman Richard Tobin would take the position of chairman in the new co-op.

It is understood there would be three vice chairmen and one of these positions would likely to be taken by current Midwest chairman Thomas Colleran.