The failure of Irish Meat Packers (IMP) and Clover Meats was a serious blow to Irish farmers and to the reputation and standing of the co-operative movement.
But why were farmer-owned co-ops unable to emulate the successes they had enjoyed with the livestock marts and creameries in meat processing?
There is no simple answer to that question.
However, it might very well be that co-operative ethos and the meat industry are not natural bedfellows.
In essence, co-ops are organisations that are owned by their shareholder members and operate for the benefit of those members.
In the context of the beef industry this meant that co-ops had to provide an ongoing outlet for farmer-shareholders’ cattle - without enjoying a contracted supply - while paying the best possible price for the livestock.
Problematic
This was always going to be problematic in a business where operating margins generally ranged from just 1% to 3%.
The challenge of operating as a profitable and successful co-op in the meat sector was cruelly exposed during the cattle crisis of 1974-75 when livestock prices collapsed due to an oversupply of animals.
Although private meat processors made a fortune during this period, the co-ops struggled.
Comments made by Golden Vale Marts (GVM) chair John P. McCarthy illustrate the difficulties the co-ops faced.
McCarthy claimed that the co-op’s factory in Rathdowney “showed its value” during the crisis of 1974-75 when it was one of the country’s few processors to pay farmers what he judged was “a realistic price” for cattle.
However, this boast came at a cost as a cash injection of £500,000 was required by GVM Meats in June 1976 to keep the business afloat.
Similarly, Clover Meats’ managing director, Michael Collins, was forced to defend the co-operative’s cow prices in October 1975 when questioned by farmer representatives at a meeting of the board’s steering committee. However, the following April he faced further farmer criticism when the business announced losses of more than £1.5m.
Meanwhile, IMP paid 2p per lb above what private processors were quoting for bullocks and heifers during the autumn of 1974-75, in response to pressure from the farm organisations and its farmer shareholders.
This action was in keeping with the processor’s co-operative ethos, but it cost the business close to £70,000 per week during the peak cattle supply months of September, October and November.
It would be incorrect to suggest that farmer pressure to pay higher cattle and sheep prices was the sole reason that co-ops failed in the meat business.
Both IMP and Clover Meats had serious labour relations issues which cost the businesses dearly, while both co-ops also had old processing plants which needed significant investment by the early 1980s.
A modern day meat factory.
In addition, the rigid committee structure employed by the co-ops was identified as a major weakness as it totally restricted the ability of the businesses to quickly react to price and market changes in what was an extremely fluid sector.
IMP’s committee system was described as “democracy gone mad”, while the former Irish Co-operative Organisation Society (ICOS) executive Maurice Colbert maintained that the structure meant “the decision-making process was strangled to death”.
Moreover, the committee system limited the co-ops’ freedom to structure deals in a manner which was attractive to some non-EU buyers.
In-fighting at board level and an inability to attract experienced beef industry management further undermined the co-operative meat processors.
Supporters of Clover Meats’ general manager, Michael Collins, claimed that deliberate leaks from board meetings contributed to his resignation in 1976. Serious board differences were also a problem at Cork Marts-IMP. The co-operative’s chair, Batt Higgins, was voted off the board by angry farmers after the business posted losses of £1.8m for 1982-83.
Similarly, John P. McCarthy was replaced as GVM chair, and three other directors lost their seats, after the Rathdowney meat factory investment brought the mart group to the brink of bankruptcy in 1977.
These boardroom battles did serious reputational damage to the co-ops as they hindered their ability to attract top class candidates for senior management positions.
For example, Clover Meats had three general managers during its last nine years of operations; IMP failed to replace its CEO Jerry Beechinor once he left and had no chief executive for most of its final year of trading; while Rathdowney was run by four board members for its last three months.
These difficulties were not confined to the Munster-based meat processing co-ops. NCF chief executive, Jim O’Mahony, admitted that the co-op lacked the expertise to correctly manage its beef factory in Sligo, and he identified the business’s failure to recruit suitable staff as a major weakness.
The inability of the co-ops to fill these senior positions suggests that appropriate candidates within the industry did not believe that the farmer-owned meat businesses had a future. This in itself was telling.
The failure of Irish Meat Packers (IMP) and Clover Meats was a serious blow to Irish farmers and to the reputation and standing of the co-operative movement.
But why were farmer-owned co-ops unable to emulate the successes they had enjoyed with the livestock marts and creameries in meat processing?
There is no simple answer to that question.
However, it might very well be that co-operative ethos and the meat industry are not natural bedfellows.
In essence, co-ops are organisations that are owned by their shareholder members and operate for the benefit of those members.
In the context of the beef industry this meant that co-ops had to provide an ongoing outlet for farmer-shareholders’ cattle - without enjoying a contracted supply - while paying the best possible price for the livestock.
Problematic
This was always going to be problematic in a business where operating margins generally ranged from just 1% to 3%.
The challenge of operating as a profitable and successful co-op in the meat sector was cruelly exposed during the cattle crisis of 1974-75 when livestock prices collapsed due to an oversupply of animals.
Although private meat processors made a fortune during this period, the co-ops struggled.
Comments made by Golden Vale Marts (GVM) chair John P. McCarthy illustrate the difficulties the co-ops faced.
McCarthy claimed that the co-op’s factory in Rathdowney “showed its value” during the crisis of 1974-75 when it was one of the country’s few processors to pay farmers what he judged was “a realistic price” for cattle.
However, this boast came at a cost as a cash injection of £500,000 was required by GVM Meats in June 1976 to keep the business afloat.
Similarly, Clover Meats’ managing director, Michael Collins, was forced to defend the co-operative’s cow prices in October 1975 when questioned by farmer representatives at a meeting of the board’s steering committee. However, the following April he faced further farmer criticism when the business announced losses of more than £1.5m.
Meanwhile, IMP paid 2p per lb above what private processors were quoting for bullocks and heifers during the autumn of 1974-75, in response to pressure from the farm organisations and its farmer shareholders.
This action was in keeping with the processor’s co-operative ethos, but it cost the business close to £70,000 per week during the peak cattle supply months of September, October and November.
It would be incorrect to suggest that farmer pressure to pay higher cattle and sheep prices was the sole reason that co-ops failed in the meat business.
Both IMP and Clover Meats had serious labour relations issues which cost the businesses dearly, while both co-ops also had old processing plants which needed significant investment by the early 1980s.
A modern day meat factory.
In addition, the rigid committee structure employed by the co-ops was identified as a major weakness as it totally restricted the ability of the businesses to quickly react to price and market changes in what was an extremely fluid sector.
IMP’s committee system was described as “democracy gone mad”, while the former Irish Co-operative Organisation Society (ICOS) executive Maurice Colbert maintained that the structure meant “the decision-making process was strangled to death”.
Moreover, the committee system limited the co-ops’ freedom to structure deals in a manner which was attractive to some non-EU buyers.
In-fighting at board level and an inability to attract experienced beef industry management further undermined the co-operative meat processors.
Supporters of Clover Meats’ general manager, Michael Collins, claimed that deliberate leaks from board meetings contributed to his resignation in 1976. Serious board differences were also a problem at Cork Marts-IMP. The co-operative’s chair, Batt Higgins, was voted off the board by angry farmers after the business posted losses of £1.8m for 1982-83.
Similarly, John P. McCarthy was replaced as GVM chair, and three other directors lost their seats, after the Rathdowney meat factory investment brought the mart group to the brink of bankruptcy in 1977.
These boardroom battles did serious reputational damage to the co-ops as they hindered their ability to attract top class candidates for senior management positions.
For example, Clover Meats had three general managers during its last nine years of operations; IMP failed to replace its CEO Jerry Beechinor once he left and had no chief executive for most of its final year of trading; while Rathdowney was run by four board members for its last three months.
These difficulties were not confined to the Munster-based meat processing co-ops. NCF chief executive, Jim O’Mahony, admitted that the co-op lacked the expertise to correctly manage its beef factory in Sligo, and he identified the business’s failure to recruit suitable staff as a major weakness.
The inability of the co-ops to fill these senior positions suggests that appropriate candidates within the industry did not believe that the farmer-owned meat businesses had a future. This in itself was telling.
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