Does a farmer’s attitude to a shareholding in a co-op and how they regard its value vary with the stage of life?

Initially, I have no doubt it is based on having a reliable processor or service provider.

As life goes on, the actual intrinsic value of the asset represented by the share seems to come more into focus.

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At this stage, I have direct dealings with and shares in three very different types of farmer ventures. Tirlán, IFAC and FBD. Tirlán and IFAC are straightforward co-ops in the traditional sense with tight restrictions on who can own shares and how they can be transferred with a strong emphasis on active, producing farmers remaining in ownership and ultimate control of the business. Major co-ops such as Dairygold have the same approach.

The old FBD co-op (as distinct from the quoted holdings company) is now a half-way house between a normal company and a co-op with rules specifying farmer control and board sanction of transfers but they have recently agreed on a much more developed system of how shares can be bought and sold.

I was sorry to miss their recent AGM but true to their word, they have informed all original subscribers of how they have retained a UK-based firm (they could not find one in Ireland) to facilitate the buying and selling of shares between existing farmer shareholders with sellers specifying the minimum price they will accept and buyers the maximum price they will pay.

A guide price or blended valuation price of €2.80 per share has been indicated. As most of the original investors have just over 10,000 shares, it’s easy to see why there has been interest in the development of a trading facility. In many ways, this system is similar to the method used by Fonterra in New Zealand.

Tirlán on the other hand pay a small dividend on their co-op shares as well as a bonus system on goods traded with the society. Co-op shareholders have also been rewarded down the years by having some of their shares converted into shares in the quoted, and now valuable, Glanbia plc. The quasi FBD co-op (FBD Developments) still owns a significant amount of the quoted FBD Holdings and the Holdings dividends are a significant part of their income as well as their better known hotels.

As co-ops grow and in many cases become very valuable businesses, it is easy to see how perspectives among farmers can vary. Some will point to the examples of Kerry and Glanbia and the significant benefits that accrued to their original investors – others will point to the likes of Dairygold and the west Cork grouping where all shares, including those issued instead of dividends, transfer at par value. I suspect we will continue to see existing practices questioned in more cases.