We have a number of different models in Ireland for deciding who keeps the value added to the food we produce as farmers.

It’s easiest to separate out the various strands when you look at the dairy sector. We have two enormously strong plcs – Kerry and Glanbia. Kerry was the first in the world to adopt a stock exchange model for a portion of the previous wholly owned co-op business. At the time this provided finance at way below the rates charged by the banks. Avonmore and Waterford followed the same model and subsequently merged into Glanbia while the other dairy co-op to go down this route, but in a much more complicated way, was Golden Vale, which of course was taken over by Kerry.

For farmers, the key development has been the separation out of the raw milk commodity processing facilities which remained with the co-op, from the more specialised manufacturing areas which moved into the plc. However, this separating out is causing tensions. The original Kerry shareholders have done extremely well. With each conversion of the farmer-owned co-op shares into the plc shares, there was a distribution of valuable and dividend-yielding plc shares.

However, as the generations have shifted, those actually milking the cows have seen the plc, the value-added part of the business, become progressively more valuable as the success of the specialised products such as ingredients and flavour becomes more apparent. But these belong to the plc shareholders – of which the original co-op is one. However, with a 13% holding, while the capital value is enormous at €1.8bn, the co-op dividend is comparatively small. Broadly we have seen Kerry’s milk price track the international commodity price for milk, rather than the profitability of the plc, and this is at the core of the dairy farmers’ dissatisfaction.

The Glanbia model is exactly the same except that with 40% of the overall business, the co-op is now essentially functioning as a top-up mechanism to ensure that commodity-supplying farmers get a slice through their shares in the co-op of the overall success of Glanbia plc.

So far, while it has met with some rumblings, farmers in the Glanbia area have been relatively content to go along with this arrangement. Though given the guaranteed margin that the basic commodity processing business gives to the plc, some view the use of co-op dividends as an artificial means of subsidising the prices of products going to the plc. Be that as it may, there is little opposition to the concept of product price top-ups. The fact that farmers trading significantly with Glanbia are invited to apply for co-op shares and so become eligible for co-op dividend top-ups probably makes the system broadly acceptable.

The other extreme of course are the full co-ops with significant value-added business – Dairygold, Carbery and Lakeland are clear examples. Last week, I was honoured to be asked to speak at the Dairygold Quality Milk Awards. The sense of the loyalty and families present, many with two generations and some with three, was very evident. In these 100% co-ops any value-added over and above the bare commodity return is retained within the business and is available for either reinvestment or distribution to farmers. In a year like this, some of the distribution to farmers takes the form of a higher milk price.

Which is the more valid model? Ultimately, every case is different and an enormous amount rests on the shoulders of board members and particularly the chief executive – who of course is hired by the board.

But the key question is probably should the production of commodities be clearly segregated out from the returns earned by the value-added products. After that, the decisions on who is entitled to what can be debated based at least to some extent on who paid and in what form for the facilities to manufacture and market the various products.

These are not easy debates. The Irish mix, because of its diversity, is probably one of the most interesting in the world, but the issues are. critically important.