Reform of CAP means dole for the farmers

July 1991

SMALL and large Kerry farmers will in effect be getting a farmers dole from the EC under the proposed changes to the Common Agricultural Policy, according to Kerry Group MD Denis Brosnan, who says the social impact on the changes may be more severe than the financial implications.

Speaking after an EGM of Kerry Group shareholders which approved the acquisition of Dairyland in the US for £23 million, Mr. Brosnan said that the reformed CAP proposals could also pose severe cash flow problems for Kerry farmers.

Mr. Brosnan said while actual farm incomes may not drop by a significant amount in the first years of the agreement, compensation in the form of direct payments to farmers will have severe social implications. “The social implications of getting a handout from the EC vis-a-vis getting a proper price for your product is a concept that many farmers will not agree with,” Mr. Brosnan said. What it will mean in effect is the return of the small farmers dole of 10 years ago except that larger farmers will now also be getting the payments, he added.

Mr. Brosnan admitted that he is worried that there will be serious delays in getting EC money through to farmers when the reforms are implemented, as is the case at present.

“This could result in severe cash flow problems for many farmers and more may even be forced out of business if the bureaucratic end of things is not sorted out before April 1992,” he added. Mr. Brosnan believes that beef farmers will be most affected and this will have a knock-on effect for Kerry dairy farmers selling calves. Speaking at the EGM of Kerry Group, Mr. Brosnan disclosed that the company is as excited about the acquisition of Dairyland by Kerry Group’s wholly-owned subsidiary Beatreme as it was about the acquisition of Beatreme itself three years ago.

The Kerry Group MD said that the main reason they acquired Dairyland was to “take out” a major competitor. He said that there was little or no extra technology acquired from Dairyland.

Beatreme and Dairyland together are far and away the biggest food ingredient firm in North America now, according .to Mr. Brosnan who estimated that the Kerry Group-owned companies control some 30 per cent of the US market in some sectors. The effective merger of the two food ingredients firms, Beatreme and Dairyland, will result in a far more profitable entity than if the two companies continued to trade separately, according to Mr. Brosnan.