It has not been all plain sailing, but LacPatrick chief executive, Gabriel D’Arcy, remains committed to putting in place new governance structures at the co-op.

Formed in 2015 after the merger of Town of Monaghan and Ballyrashane co-ops, LacPatrick is now a £300m turnover business, and with a new milk dryer at Artigarvan due to become operational in April, the potential is there to significantly grow.

However, D’Arcy wants modern governance structures in place to match his ambitious plans. “I am fully committed to co-op principles. We are now a £300m-plus turnover company and we have got to start governing ourselves as such,” he told the Irish Farmers Journal.

Central to that has been to admit over 350 suppliers (mainly in NI) as members of the co-op. That represents a significant move away from historic arrangements in NI where most farmers supplied milk without a contract, and were free to move to other processors.

“The majority are long-standing Town of Monaghan suppliers – loyal suppliers, in many cases for 20 to 30 years,” said D’Arcy. When those suppliers not currently shareholders were asked if they wanted to become full members of the co-op, a total of 350 expressed an interest and will receive shares in the weeks ahead. It means that over 99% of suppliers to LacPatrick will now be shareholders in the business.

“The proposal was unanimously supported by the board, and approved by council. Our aim is to have a full 100% of suppliers as shareholders,” confirmed D’Arcy.

While the proposal to bring in these suppliers has been approved, fundamental changes to governance are yet to take place, after the plans did not receive the necessary two-thirds majority at a special general meeting in Monaghan last week.

The proposals, drawn up by a sub-committee of the board, would take the board from 25 down to 15, drawn from a new 60-member council formed from four electoral areas (Cavan/Monaghan, Derry/Antrim, Down/Armagh and Tyrone/Fermanagh) and representing proportionally all suppliers across Ulster. There would also be a process put in place to ensure an annual turnover of members of both the council and board (each member, including the chair, would serve for a four-year term), and training provided in corporate governance to board members.

“It is a lot of change, without a doubt. But look back at various corporate scandals over the years. We must have a proper system of good corporate governance,” said D’Arcy.

At the meeting last Tuesday, attended by around 100 members (10% of shareholders), the majority voted in favour of the changes, but not the 66% required.

“There were some valid comments made and we will take note of those and revisit. I am extremely confident that there is significant support throughout Ulster for the changes to be made. It will make us stronger and more representative,” said D’Arcy.

Speaking after the meeting, current LacPatrick chair Hugo Maguire said that the board is fully committed to further examination of the system of representation. “We will reconvene in the coming months with further proposals for consideration by all of our shareholders,” he said.

No truth in letter

When asked about an anonymous letter circulated to suppliers, critical of senior management at LacPatrick, D’Arcy was dismissive. “There is not a shred of truth in any of it. It is an underhand campaign.

‘‘Some people just don’t want change, or perhaps there are other reasons. The marriage of Town of Monaghan and Ballyrashane is a source of great strength, is very cohesive and has worked extremely well,” he told the Irish Farmers Journal.

The £30m investment by LacPatrick in a new milk drying plant at Artigarvan, Co Tyrone, should be up and running by April 2017. “It is on time and on budget. The new technology provides us with the opportunity to make new products for a number of significant new customers, including infant formula grade produced to the highest standards,” maintained LacPatrick chief Gabriel D’Arcy.

LacPatrick is among a number of Irish companies exhibiting at this year’s Gulfood 2017, the world’s largest annual food and hospitality trade show, taking place in Dubai. Speaking ahead of the show, D’Arcy was confident about signing a number of “substantial contracts” at Gulfood, including two relating to products from the new dryer.

Looking ahead, the LacPatrick investment in steel at Artigarvan creates an interesting new dynamic in the NI dairy industry. Once up and running, capacity at Artigarvan is expected to increase from 1m litres to 2.5m litres per day of raw milk. That equates to approximately 500m litres of milk per year, which is close to the amount of milk that heads from north to south annually for processing.

“The investment provides a full solution to the NI dairy industry if an iron curtain is put up at the border as a result of Brexit. We have had lots of expressions of interest from other milk processors,” claimed D’Arcy.