THE chances of a merger between Waterford and Avonmore Co-ops have received a boost with the ICMSA backing the proposal and urging its members to vote in favour.

In a statement the organisation's president, Mr Frank Allen, said the new company would "have the potential to be a leading world dairy and meat entity".

He said the ICMSA had obtained written assurances from Avonmore and Waterford in relation to the minimum milk price payable to the end of December 2000.

He said the commitment from the two co-ops to give 3p a gallon over the average price for milk was a "legally binding undertaking on the pew company and is not dependent on savings made".

The first of the two special meetings takes place in less than a week to approve or reject the merger.

The three main farm organisations - the IFA, Macra na Feirme and the ICMSA - have all now come out in favour of the proposal.

Waterford Co-op shareholders seem to be moving closer to voting in favour of the merger.

So far only one of its advisory committees has come out publicly against the deal.

The advisory committees are the area bodies which represent co-op members and elect 13 members on to the main co-op board.

All advisory committee chairmen, who spoke to the Irish Times yesterday, with the exception of Kilmeaden, said they would be voting yes and believed most of their members would too.

However, many of them said it may be difficult to get the 75 per cent required to sanction the merger. Even if the first meeting of shareholders - being held next Friday - votes by 75 per cent to approve the deal, a second confirmatory meeting also has to take place.

Mr Tom Donohue, a milk-supplier and the chairman of south-east advisory committee, one of the biggest of the nine, said the vast majority of farmers he represented were in favour of the deal

"We are firmly in favour and even the few who were against have changed their mind since the information meetings held locally by the co-op board members

He said farmers were not worried about farm ownership being diluted down to 55 per cent. "The ownership will only be reduced further if farmers want it, despite the scaremongering," said Mr Donohue.

A number of the chairmen expressed satisfaction with the share spin-out, which will involve a conversion of 1,000 co-op shares into 850 Avonmore plc shares and 830 shares in the new co-op.

Mr Willie Moore, chairman of the Castlelyons advisory committee and who farms in east Cork, says he has not met anyone voting no in his area. "Most milk suppliers are positive about getting the same type of milk price as that given by Dairygold; that is swinging a lot of votes".

Mr John Dowley, the chairman of Waterford Foods is chairman of the Carrick-on-Suir committee and, not surprisingly, is in favour.

He says that, earlier on, he had worries about the ownership of the new co-op, but has now been reassured.