Farmer suppliers of Golden Vale Foods plc, who are interested in acquiring the company's milk processing division in Charleville, Co Cork, claim that the management of the company has failed to furnish them with sufficient information to allow them to make an offer for the facility.
The farmers set up a four-man sub-committee of the co-operative's board to pursue the purchase with the management after the chief executive, Mr Jim Murphy, announced in January that he wanted to dispose of milk processing in order to concentrate on the cheese and food ingredients divisions.
But only a few meetings have taken place between the sub-committee and the management since then, even though a mid-April deadline for the disposal of the milk processing division had been set.
"It would appear to me from meetings down there that farmers know very little of what's happening," said Mr Padraig Walshe, chairman of the IFA's dairy committee, yesterday. "They can't make a decision without information."
Farmers believe that the management of the plc is delaying disposing of the milk processing division because markets for commodities such as butter and skim milk powder have improved considerably in the last three months. Whereas last year, the butter and milk powders division, which accounts for 38 per cent of Golden Vale group sales, lost £700,000 (€888,817) - profits of up to £5 million are projected for the current year.
Golden Vale's interim figures are published tomorrow and Mr Murphy is expected to report solid results for the first half of the year.
The farmers' position is not strong in that the co-operative owns less than 0.2 per cent of the plc, whereas in Glanbia, the co-operative owns 54 per cent of the plc and in Kerry more than 30 per cent. Nor have they been successful in getting representation on the board of the plc: members proposed by the board of the co-operative have been rejected by the board of the plc. "If they want to get back into control, they are going to have to look seriously at some sort of buyback and examine the figures and see if it's possible," Mr Walshe said.
No price has been sought or offered for Charleville milk processing; the book value of the division which includes the AI services, the liquid milk plant and farmland is £40 million.
The management's stated target was to achieve a margin of around 5p a gallon on milk processed or otherwise seek one of three alternatives for the processing division: to sell back the division to the co-operative; co-operate with third parties on a formal or informal basis to achieve substantial cost savings or close it down entirely. More than that 5p a gallon is now coming from the market - there were increases of 1.6p in mid-May, 4p on July 1st and 4p on August 1st.
Golden Vale's consumer foods division includes cheeses and spreads, cream liqueurs and the prepared foods section, mainly the Rye Valley business in Carrickmacross, Co Monaghan, which has been expanded at a cost of £28 million since it was acquired two years ago.
