Chart 2 : Processing of Milk by PLC Co-ops (%),
1961-1996
YEAR
The ability of the cooperatives to respond so expeditiously and, on the face of it, so successfully3,
to the challenges posed by the quota provides prima facie evidence that they were compelled by
the desire to maximise profits or, at the very least, were no less capable of adjusting to changed
circumstances as firms which explicitly conformed to the traditional profit-maximising paradigm.
Our objectives in this paper are first and foremost to analyse the economic behaviour of dairy-
marketing cooperatives using Ireland as an illustrative case. Specifically we want to explore the
extent to which cooperatives diverge or converge towards the framework of the profit-maximising
firm. Second, we want to establish the economic responses of these firms to changes in exogenous
variables and in particular to the imposition of the milk quota in 1984.
3 At present there are three publically-quoted milk processing companies in Ireland: the Kerry Group, the
Avonmore, Waterford Group (AWG) and the Golden Vale Group. Kerry over the coarse of 25 years has evolved
from a regional Irish milk-processing co-operative to one of the world’s leading specialist food ingredients and food
manufacturing businesses. Through an extensive and careful acquisition policy it has gone from a market
capitalisation of IR£50 million in 1986 to a current market capitalisation of IR£1.6 billion. Since the Group’s
listing in 1986 it has had an unbroken record of profit and earnings growth with a current P/E ratio of 24.6. AWG
was formed in 1997, which emerged from the takeover of Waterford Foods by Avonmore Foods (listed in the late
eighties on their conversion from co-operative friendly societies). The group is the largest cheese producer in
Ireland and the largest cheese processor in the UK. The current P/E ratio is 19.3 and growing. Another company
that was a co-operative for most of its existence is Golden Vale, which was listed in 1990. The market capitalisation
of this company now stands at IR£801.3 million with a P/E ratio of 19.3. This information was taken from DAVY
(1997 and 1998).