Risk management key for Irish co-ops in face of new challenges

The importance of efficient risk management in Irish co-operatives was underlined at the 42nd Irish Co-operative Organisation Society (ICOS) National Conference earlier today (Thursday, November 8).

This comes as co-ops and marts face increased challenges from a variety of angles including environmental sustainability, mart health and safety, spiralling insurance costs and Brexit and CAP reform.

However, should these risks be managed carefully, opportunities arise, today’s attendees heard.

“Risk and opportunity must be seen as two sides of the same coin where – if we can effectively manage, embrace and monetise the risks that surround us – then our businesses should continue to grow and prosper,” ICOS president Michael Spellman told the gathered visitors in Naas, Co. Kildare.

L_R: John Jordan, Ornua; Michael Spellman, ICOS president; Fiona Muldoon, CEO, FBD; and TJ Flanagan CEO, ICOS. Image source: Alf Harvey

The conference was attended by co-operative leaders from all over Ireland, including dairy processors, national livestock marts and community based enterprises.

It was addressed by high-level speakers including: FBD CEO Fiona Muldoon; John Jordan, CEO of Ornua; Guy Smith, deputy president of the National Farmers Union (UK); and others including figures from the fields of industry, business, research, climatology and regulation.

“The timeframe in which risks present themselves, and be mitigated, has tightened with considerable change and volatility in world markets, in geopolitical affairs and in the environmental matters that we must all now have regard for,” Spellman said.

A series of workshops addressed key areas of: sustainability; mart health and safety; and corporate risk within the co-operative sector.

‘New quota’

These included concepts of environmental sustainability as the ‘new quota’, the challenges around water quality, greenhouse gases, ammonia emissions from farming and the preservation and promotion of biodiversity.

“Our national and sectoral commitments to the environment, and how we address them, will be defining for us as an industry. We hold our sustainability credentials very dearly, but they will be used against us unless we build on them, improve our position, and demonstrate the quality of our proposition to customers, regulators, and fellow citizens.”

Farmer ownership and weather

The priority of maintaining co-operatives and their aligned processing businesses in farmer ownership received attention in a case study of farmer-owned Murray Goulburn which fell into private ownership in Australia earlier this year with little return of value to farmers.

Spellman underlined the need to retain farmers control of routes to market, saying this requires continuing investment and development of co-ops, with effective risk management by directors.

The ‘bizarre weather events’ of the past year also came under the spotlight at the conference, which resulted in a very difficult period for farmers and their co-ops.

The ICOS president highlighted the importance of a strong co-operative sector, adding that Ireland needs to develop resilience on farms and build the co-operative balance sheets for such conditions going forward.

Brexit and CAP

Commenting on Brexit and CAP, Spellman said: “The EU is losing one of its biggest net contributors and that has resulted in other member states having to increase their individual contributions to address the shortfall.

“In addition, Europe has identified new ambitions, which puts pressure on existing funds. But we have said quite clearly that new ambitions need new money.”

“Recent comments from Commissioner Hogan are reassuring because he is taking the future of European agriculture very seriously with his statement that ‘farmers have to be put first’.

46% of the incomes of all EU farmers comes from direct payments. Resources will need to be targeted towards the ‘active farmer’.

“There is a commitment at Commission level, regarding the 2020-2027 proposals, that approval for member state plans will not be given unless the issue of generational renewal is addressed. So it’s clear that the public will always have to acknowledge the importance of farming.”

Spiralling mart insurance

The meeting also heard that the marts sector simply cannot afford to see insurance premiums spiralling in cost.

Throughout this year, marts have been implementing extra measures to reduce health and safety risks.

Delegates were told that ICOS is promoting a collective and coordinated response across the marts sector to ensure that no single mart will be disadvantaged as a result of any measures which need to be adopted.