A LIMERICK Leader article from 2007 is expected to play a central role in Jerry Henchy’s €8 million High Court damages claim against Dairygold.
Mr Henchy, 48, a father of three who lives in Grange, headed up Dairygold from 2003 to 2009.
It was claimed that Mr Henchy’s €560,000-a-year chief executive job was wrongfully terminated for “spurious” reasons unrelated to how he did his job after an orchestrated campaign involving the company’s chairman Vincent Buckley and others.
The case resumes in the High Court next week. Mr Henchy is expected to give direct evidence on Tuesday in relation to the Leader article written by Patricia Feehily on November 27, 2007 entitled ‘Milk testing still a cause of grief to farmers’.
Prior to the court case commencing Dairygold said: “The society has no comment to make with regard to legal proceedings being taken by a former CEO and will vigorously defend any such proceedings.”
On July 2, Mr Henchy’s counsel, Patrick Hanratty SC, told Justice Herbert the “fourth and final major issue” was the question of milk testing.
He explained to the judge when milk is collected from farmers samples are taken which have to be tested in the laboratory.
“Essentially the price of the milk that is paid to the farmer is dependent upon the quality of the milk. And the quality of the milk very much is driven by the butter fat and the protein content of the milk so this is measured on a continuous basis as it is collected from the farmers. And in this case, Dairygold had its own testing laboratory in Mallow,” said Mr Hanratty.
“Obviously because the price that farmers were paid for their milk was dependent upon the results in the laboratory the whole question of milk testing was a sensitive issue so far as farmers were concerned. And was the source of mistrust between farmers and farmers’ organisations and Dairygold over time,” he added.
Mr Hanratty said the question of the accuracy of milk testing by Dairygold came up from time to time and was a bone of contention between Dairygold and its farmer members in various parts of the area in which it operated.
It became “serious” in 2005 when a comprehensive milk testing project carried out by Limerick IFA dairy committee claimed that dairy farmers are not being properly credited for protein levels and butter fat in their milk.
The project found variances in the value of protein worth up to 3.8 cents per gallon or 0.84 cents per litre.
In the Farmers Journal, Limerick IFA dairy chairman Richard Kennedy said the findings re-enforce the case for the immediate introduction of independent certification by the Department of Agriculture.
“Measurement of both protein and butter fat should be open and transparent. There should be no room for doubt, Independent testing should be legislated for immediately,” said Mr Kennedy.
Mr Hanratty said while the issue did settle down in 2005 it “didn’t go away and was always there, rumbling on”.
In 2007, it came back in a “serious way” due to an article in the Limerick Leader of November 27. The entire article was read out in court.
An IFA analysis of testing by Kerry, Glanbia and Dairygold found that the “procedure is still costing the farmers money”.
The results were generally found to be outside “acceptable tolerances”.
“None of the protein results, except Glanbia’s, and few of the butter fat results were to the advantage of the farmer,” read the article.
The issue was brought up at a meeting of the Dairygold company at the end of November said Mr Hanratty, who referred to the minutes. Members expressed concern that the matter had caused serious damage to the integrity of the Dairygold system in the eyes of farmers and suppliers. “Now, as a result of this debacle, judge, Mr Henchy made his own enquiries in relation to the matter... And Mr Henchy came to the conclusion, having done this that the concerns of the IFA in relation to the results of milk testing were well-founded. He made a decision which he says was a management decision for him to make that, there and then the company was going to move to independent milk testing,” said Mr Hanratty.
The move was to “hopefully engender the confidence of the farmers and put to bed this issue, this bone of contention that kept recurring”.
The senior counsel said Mr Henchy was questioned at regional meetings by farmers about the Limerick Leader article.
“Again, indicating that there was something wrong with the milk testing results which were to the detriment of farmers. And Mr Henchy announced his decision that he was going to bring the company, once and for all, to independent milk testing outside the company. And he mentioned a couple of ideas that he had as to who might do this. As it turned out, this wasn’t entirely popular with a number of members of the board of the company,” said Mr Hanratty.
Bertie O’Leary, who was a supporter of Vincent Buckley –chairman of Dairygold at the time of Mr Henchy’s dismissal – had political ambitions in ICOS, said Mr Hanratty. ICOS is a conglomeration of co-operative societies in the country. “What Bertie O’Leary’s interest was is he wanted to get ICOS to do this testing. He thought it would be a prestigious thing for ICOS to have control over this testing,” said Mr Hanratty, who added that Mr Henchy had a strong view that this was an entirely impossible and implausible proposition.
He told the judge that it rumbled on for the rest of 2008 and into 2009 coming up at all the board meetings.
An ICOS initiative to establish a centralise milk testing laboratory had the potential benefit to dairy farmers throughout Ireland but unfortunately failed to attract the industry consensus required to proceed, read out Mr Hanratty.
“And of course with that, or without it, Mr Henchy’s decision or proposal to move Dairygold to independent milk testing also died ... The relevance, judge, from the point of view Mr Henchy specifically in the context of the claim in these proceedings is that he made enemy again of Mr Buckley in relation to this, who was supporting Mr O’Leary’s proposal to move it out to ICOS, but also of Mr O’Leary.
“And this was a situation in which he made a decision, having come to the conclusion that there was a problem with milk testing and having decided to do something about it, which is the proper exercise of his function as chief executive making executive decision, found himself again becoming unpopular, to put it neutrally, with people in the company,” said Mr Hanratty.
The case continues.