King of the hill: ‘Dairy is the only sustainable sector’

Thursday, May 18, 2017, will go down as the greatest moment of Henry Corbally’s business career.

As he walked up to the podium at Punchestown, Co. Kildare, to make his keynote speech, the then chairman of Glanbia plc – a world-leading performance nutrition and ingredients group – felt “very much in touch” with the bedrock of the company – its farmers.

More than 90% of Glanbia Co-operative Society’s shareholders had voted in favour of establishing Glanbia Ireland – a joint venture involving the co-op paying €112 million to acquire a 60% stake in Glanbia plc’s dairy Ireland division.

Sitting down with AgriLand to reflect on his 44 years at the coalface of Irish agriculture; Corbally – who last month was succeeded as Glanbia chairman and subsequently retired from the board of directors – says he was acutely aware that it would be remembered as a historic day for the grassroots.

It also solidified his thinking that when it comes to future-proofing the Irish agri sector – dairy will be king.

“To take back 60% of the rest of the Irish business and put it into farmers’ hands was the proudest moment of my career. There were 2,500 at the meeting and 93% voted in favour. To get such backing from the shareholding was a great honour and privilege.

Apart from family stuff, which I treasure, that was the greatest moment of my business life. I felt I was doing a really good thing for farmers.

The Corballys have been farming at Kilmainhamwood, Co. Meath for about 400 years; the agri bloodline dates back to the 16th century.

“My father was here; my grandfather was here; his father was here – and god knows how many were here before that.

“I was born on this farm – myself and my three brothers and four sisters – and we all live within 20 miles of here still.

“My father always had dairying; but like every other farm it was a mixed farm. We had sheep, a few cows, sucklers, we had some barley, hay and oats and potatoes and turnips,” said Corbally, who will celebrate his 64th birthday this year.

There is an age limit of 65 years on the board and council of Glanbia; it is understood that this was a factor in Corbally’s departure from the company.

The very hilly townland – built along the River Dee – is home to a small farming community with a lot of mixed enterprises.

“It’s not that strong in dairying. There were a lot more milking parlours in the parish 40 years ago than there are now,” he said.

Surprisingly, the father of three and husband to Edel says that as a young lad he “probably never” wanted to be involved in farming.

However, as his father Peter battled with arthritis, his eldest son found himself moving into farming full-time.

Young gun

At the tender age of 20 Corbally was appointed secretary of the local Irish Farmers’ Association (IFA) branch – Tierworker IFA.

He has been involved in farm politics ever since.

I’m of an argumentative nature so I was immediately drawn to it. I saw that there was a lot of work to be done on behalf of farmers so I rowed in.

“I was very much younger than everyone else involved in IFA at the time in Co. Meath. I went to all the county executive meetings until I became county chairman so I was heavily involved,” he said.

Corbally was chairman of Meath IFA from 1986 to 1990. He served on the National Council with four different presidents and was also elected chairman of the National Liquid Milk Committee; plus he served on the Dairy Committee.

Corbally
Henry Corbally

He says he stumbled into Glanbia “by accident”.

“We had a local committee representing the liquid milk farmers when Avonmore Creameries came and bought up all the liquid milk assets in this area.

“They bought Drogheda Dairies and they consolidated the liquid milk business in the north-east. I was on a committee representing the north-east. I won a seat on the council in 1991.

It happened sort of by accident; I didn’t really know the significance of it. But I did immediately see that there was almost more significance to what the co-operative movement was doing rather than the farm lobby groups.

Having built a strong profile with a large cross section of farmers, Corbally developed a keen ability to work with a team, understand a group dynamic, and he was able to bring people with him.

“No matter what I’ve done in life, I find myself as chairman of a lot of organisations. I found myself as chairman of my local Gaelic football team here for 14 years – Kilmainhamwood.

“I played Gaelic football until I was nearly 40 – normally at centre forward. I was heavily involved in the establishment of our pitch, dressing rooms and a lot of major infrastructure at the grounds – along with a group of people in the area,” he said, highlighting that during this period the club experienced great success when they won the Meath Senior Football Championship.

His two sons, Harry and Richard, still play for the club.

In 1999 – post the merger between dairy giants Waterford and Avonmore to create the fourth biggest dairy processor in Europe and the fourth biggest cheese producer in the world – Corbally was elected to the council of Avonmore.

The official change of title from Avonmore Waterford Group to Glanbia – which means “pure food” in the Irish language – occurred in March 1999. The group has four segments: Glanbia Nutritionals; Performance Nutrition; Glanbia Ireland; and Joint Ventures and Associates.

“We were in the quota era and the big thing that was happening was the consolidation of the dairy industry on farm.

“Even though the quotas were there, some farmers were spending a lot of money buying up quotas from other farmers,” he said.

It was a time when national dairy farmer numbers plummeted from 80,000 to 18,000.

If you analyse it down, that’s five farmers stopping milking every single day for 30 years without a break.

Glanbia’s plan for the abolition of quotas began in 2011 with the first of its farmer surveys. Following that, the company built its hi-spec infant formula facility at Belview, in Co. Kilkenny.

“The surveys have been enormously accurate, we had almost 90% response. They said they would expand by 50%.

“Heretofore they have expanded by 35% up to this year, with plans to expand another 30% in 2020,” he said.

Hunting ground

Corbally, also a keen huntsman all his life with Tara Harriers, was elected vice chairman of Glanbia, which has a workforce of 6,000 people – in 2011. He was appointed as chairman of the Glanbia plc Board in June, 2015.

I always had ambitions to become chairman. I wanted to be in a leadership position. I felt there were things I could do; I felt there contributions I could make.

“I felt very privileged to be on the board and to be vice chairman. But to be chairman was beyond my wildest dreams – I was very privileged and very honoured.”

He said the involvement of the non-executive directors from the business community – including: Paul Haran; Dan O’Connor;Donard Gaynor; and Patrick Coveney – have also really added to the capacity of thinking on the board.

“Each of the regions is represented by a farmer that represents several thousand shareholders and who carries a big responsibility – both to the company and back to the farmers,” said Corbally.

He cites Glanbia’s €300 million acquisition of its sports nutrition business in the US as one of the key drivers of the company’s global success.

“Not everyone thought it was the golden goose that it might be. There were all kinds of questions about it and we in the board questioned it very deeply ourselves.”

Also Read: Glanbia Co-op shareholders clear the way for the creation of a new venture

He added that changing of the corporate structure at the same time “really drove” the value of Glanbia.

We haven’t lost the Irish business from the farmer and that is absolutely the strength of the organisation. The co-op is in a very strong position. It has very good cash flows, it has fed out a huge amount of supports for farmers – this year in particular.

He is very aware of the impact the extreme winter and summer weather conditions have had on farms nationwide over the last seven months.

“We’ve always talked about weather events affecting other people – until now. A weather event was a big drought in America or Ukraine, or something happening in New Zealand.

“But the last two weather events have been at home and we weren’t expecting those at all. We had one of the most difficult winters in my farming career and now we are faced with one of the most difficult summers.”

Dairy domination

Corbally predicts that Glanbia will soon go back to members to survey them again on expansion plans.

“Anecdotally, farmers will be looking at how many cows they need, how many cows they can feed. And they will be looking at providing fodder.

“Some of what we assumed as norms may not be norms anymore,” he said.

Although he is very confident that expansion in dairying will continue, he is not so optimistic about other sectors.

I believe dairy is the most sustainable sector in Ireland. I don’t think that because farmers are making a fortune; but the alternatives to dairying in Ireland are quite poor at the minute.

“The tillage farmers tell us how little they are making and the low grain price has been sustained now for four or five years. People simply can’t continue not making money from an enterprise.

“The beef enterprise and the suckler situation is very much under scrutiny – we see the farmer organisations looking for further subsidisation of suckler cows – I don’t know how feasible that is,” he said.

Glanbia
Henry Corbally, Glanbia chairman with Michael Creed, Minister of Agriculture, Food and the Marine, and Siobhan Talbot, managing director of Glanbia.

Corbally has become increasingly convinced that a lot of land in other enterprises will come into dairying.

“Maybe they will not come in directly as dairy farms; but, they will come in through rental, out farms, heifer rearing or through other systems.

Dairying on a family farm sized operation – 100ac plus – is the only real feasible enterprise that would get a family income.

“If you look at the structure of Irish farms there are very few large farms; most are fragmented and small.

“I think that farmers should be more willing to consolidate their holdings – they are very slow to do that and they should be more willing.

“Other enterprises are really struggling in the face of international competition and they will more lend themselves to part-time farming. That has been the trend and I don’t think it’s going to change,” he said.

Livestock numbers

Corbally, who is now full-time farming on his 140ac holding where he milks 100 cows, also conceded that overall livestock numbers “probably won’t grow” – particularly in light of climate change and carbon emissions challenges for agriculture.

“Overall livestock numbers probably won’t grow; but, the dairy herd within that probably will grow. I think that other types of cattle will be replaced by dairy cattle.

Farmers are becoming more aware of their own responsibility for sustainability issues – more so in dairy. They will be first in line to educate themselves on the things that they need to do.

He warned that new entrants into dairy must be conscious of the parlour-to-processor supply chain.

“Every Irish farmer presumes that if he starts milking cows that there is someone who will come in a truck and take it away – and I think that is a very big assumption.

“There is a lot of investment behind that truck going to a new farmer and taking away milk from 100 or 200 cows.

“We have seen in Britain, in Europe, and indeed in the US situations where people had nobody to sell their milk to because they didn’t properly plan for where their milk was going to go.

“Glanbia is processing one third of all Irish milk – and that is really important. Any sort of blip in that supply chain management is a really important thing for farmers to give consideration to,” he said.

No ‘sofa farmer’

For now, Corbally is busy milking. His enterprise, where he employs one full-time worker – produced 600,000L last year.

Also Read: Corbally retires from Glanbia board of directors

“I never became a sofa farmer; I’ve always farmed so I’m well adjusted,” he said.

However, like most farmers at the moment, Corbally is also already dipping into his winter fodder supplies as a result of the ongoing drought conditions.

“I’m coping exactly the same as everyone else is – a combination of dry paddocks, bales of silage and extra meal – and I’m following what everyone else is doing.

“I’m coping reasonably well, the cows are milking well; but it’s a lot of hassle and a lot of expense. The big question is where is it all going to end? There is no sign of rain,” he concluded.