How Tirlán aims to become the “cooperative of the future”

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Reinventing a €3 billion wheel is no easy task – especially when the fortunes of more than 11,000 farming families depend on it – but with decades of experience from his former company Glanbia behind him, the new Tirlán’s general manager, Jim Bergin, is looking forward to the challenge ahead.

With a new name just off the press and a promise to give priority to a single shareholder – the Irish dairy farmer – Mr Bergin said his ambition was to rebuild the company as “the cooperative of the future”.

But his first big challenge as managing director will be to unite the hearts and minds of his farmer suppliers and shareholders.

“The big challenge for us now is to adopt the cooperative spirit with a single shareholder,” Mr. Bergin said.

“The two most important stakeholders from the point of view of our organization are our employees and our farmer shareholders. Now, again, our farmer shareholders in Ireland are also our customers, our suppliers and our shareholders, so [the launch] was very important.

“The big issue for us is alignment with our farmer shareholders – before we were an organization where we had two sets of shareholders.

“We are very clear, and history will guide us on what we do, but in terms of engagement, we now have a group of shareholders, and that is our priority.

“It will allow us to have a single focus, with one shareholder, and we will have a fully aligned business from the farm to the cream that we sell to China.”

Reconstruction and redesign

Now that the company’s new corporate identity has been revealed, a “huge corporate rebuild” is underway to develop the company’s purpose, vision and values, and develop a new business strategy – which should be completed by the end of the year.

“We started with the cooperative as a modern company, so we restructured our board of directors,” Mr. Bergin added.

Tirlán’s board will consist of 20 people made up of 14 farmer representatives, four executive directors and two independent non-executive directors.

The new board structure will also include seven sub-committees: Strategy, ESG (environmental, social and governance), Rules, Compensation, Nominations, Representative Review Committee and Corporate ID.

But how will the new company be structured?

“From an organizational perspective, a PLC provides returns to its shareholders through earnings growth – the growth in EPS, which is reflected in the value of the shares so that they achieve capital appreciation, and then a dividend. And then a co-op, returns are paid on product prices and the dividend – so it’s very clear that’s the model,” Bergin said.

“The co-op itself was basically a holding company – an investment vehicle for 34 years. There were seven employees,” he said.

“So now there are three streams of business within the business – you have the core business, which is the previous joint venture with Glanbia Ireland – that’s the €3 billion business. We have our investment business – and we have two elephants within it – we have investment – our 31.9% of Glanbia plc, which is worth 4.1 billion euros today. And then, in our SGM, we have been authorized to create an investment fund of 150 million euros.

“This can be used for investments to create a third stream of income to support our returns to our shareholders, whether in product prices or dividends.

“We are clear that it has to be a constant cash income, which sets a level of parameter if you wish. We have engaged Ernst and Young, who are currently working on a framework for this investment fund .”

New ways of working will be encouraged with the company’s headquarters moving to a new collaboration center in the old brewery in central Kilkenny.

“We are striving to create the cooperative of the future,” explained Mr. Bergin.

“We are carrying out a very important review of our representative structures and we have consulted with organizations around the world – in Oceania, the United States and Europe.

“We have met with a number of co-operatives in Europe and consulted with ICOS and other co-operatives here in Ireland. In particular to address the issue of gender balance and encourage young people.

“To add diversity to our structures and accommodate people who may have different viewpoints. This also has benefits for creative thinking.”

Co-operatives in Ireland tend to be seen as traditional organisations, however, Mr Bergin explained that they are well placed to meet the challenges of a modern world where environmental and social corporate obligations have come to the fore for many buyers and purchasers.

“Cooperative Day has arrived because people are so much more aware and expect companies to act responsibly.”

“Co-operatives are already doing a lot of things,” Mr. Bergin said. “And that’s important, especially in today’s world of social media and the responsibility and ability of people to connect things – the cooperative model takes that into account because our supplier, customer and shareholder are the same person. We need our advisory board

“Whether it’s supporting a miners game, a golf classic or a raffle, co-ops are truly part of the fabric of rural society.

“Cooperative Day has arrived because people are so much more aware and expect companies to act responsibly.”

Such is the importance of sustainability that the company’s new cheese factory, currently under construction and expected to be completed by March 2024, will include a water filtration system so water can be reused multiple times. in the plant before being disposed of.

Considerable work has also been done to develop collapsible, reusable wooden crates to ship the resulting cheeses.

Even the company’s new name, which means land of plenty, is a nod to a greener and more sustainable future for Irish agribusiness.

“These two words [Tirlán] – they really mean something to us,” Mr. Bergin added.

“Our focus on the land is very important to us as we are in the decade of sustainability, and Irish farmers are so connected to their properties that this is our focus.

“Ireland is, from a subsistence point of view, a land of abundance; we export 90% of what we manufacture.”

The future of farmers

But what will the major changes underway mean for these farmer suppliers and shareholders?

Mr Bergin said he envisions a future “less volume driven, although there will be growth through productivity and science”.

“It’s going to be less about milking more cows and capacity, and more about science and performance and getting cows that perform better, with better conversion,” he said, explaining that farmers already had reacted well to the launch of the new business. .

“It was really important for us to be as inclusive as possible [with the launch]; we had all of our employees in different sites, and the portfolios were out at each of the sites, and then we had a board meeting, an advisory board – we have 88 farmers on our advisory board, and we got feedback brilliant of them.

“Some of them I would know very well – and they wouldn’t be afraid to tell me the truth, that’s for sure!”

And will history prove that taking back control was a good decision for these farmers?

“Absolutely,” Mr. Bergin said. “I think it was a great decision; in particular because of the organization they may have in the future – the cooperative of the future. I really think that the time of the cooperative has returned.

“In 1988, Waterford Farmers took their business public; the cooperative had a subsidiary which became public. Avonmore Farmers had a subsidiary which went public. Since then we have distributed over €800m to members and the cooperative still has an investment worth almost €800m in Glanbia plc.

This therefore shows that automata have created this kind of value. And you have the small medieval town of Kilkenny, now home to a 3 billion euro business.

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