WHEN Jim Murphy takes over as chief executive of Golden Vale in two months time he will face many difficulties and those difficulties will not just be confined to the Charleville group's business activities. Few could doubt Mr Murphy's ability to tackle Golden Vale's operational problems. His track record as a senior manager with Express Foods and The Cheese Company over the past 20 years indicates he has all the experience required for the operational side of the business.

Whether a 50 year old Dubliner who has worked in the British dairy industry for 20 years has the attributes to tackle the internal political problems of Golden Vale - which in the past six months have verged on outright conflict - is another matter.

Not surprisingly, Jim Murphy has kept a low profile since his appointment was confirmed a week ago. But most observers believe that he knows he has what it takes to tackle what has been described in some circles as a corporate dysfunctional family.

At least the decision of the Golden Vale board to confirm Mr Murphy's appointment indicates that the two board factions have decided to bury the hatchet - at least for the moment.

The board finally seems to have accepted that it had to get its act together and stop making a laughing stock of Golden Vale in the media. It might be going too far to say that Jim Murphy will have a honeymoon period when he takes over, but he certainly will be given time to develop a recovery strategy," says one informed source.

That said, farmers who supply milk to Golden Vale and who own the co op have a record of participating, some say meddling, in management affairs - and that goes back many years. Some of these will undoubtedly be reluctant to accept the unpalatable medicine that Jim Murphy will have to administer to get Golden Vale's milk price more in line with world dairy prices.

Mr Murphy takes over a couple of months before milk production begins to pick up, but few observers are in any doubt that a severe cut in the price for 1997 milk prices is facing Golden Vale's 4,500 milk suppliers.

Those suppliers are already smarting from the £3.1 million superlevy fine - an average of almost £700 each - as well as £4 million in superlevy payments in respect of 1995/96 milk over production.

Imposing a milk price that would cut dairying incomes by around 10 per cent may be an unpalatable prospect for milk suppliers, but the investors who own the publicly quoted Golden Vale plc and who have suffered pain in the form of a collapsed share price will want to see Golden Vale's recovery pains shared more equally.

Sandwiched between two processors - Kerry and Dairygold - which have traditionally paid an above average milk price, Mr Murphy will no doubt be conscious that his milk price in 1997 will have to be competitive. But at least, the poaching of milk supplies - which made a joke of the co-op ethos - seems to be consigned to the past.

In those bad old days, some Golden Vale - milk producers switched supplies to Kerry, some to Dairygold, some to Tipperary Co op and some even to Shannonside in Ballaghaderreen - 150 miles away.

Now Golden Vale suppliers who approached Dairygold recently about switching supplies have been rebuffed. "Dairygold doesn't want a milk war any more than Golden Vale," commented one source.

Informed sources believe that as well as confronting the milk price issue, Jim Murphy will also have to take a close look, at an early stage, at the administration of the milk quota.

The Department of Agriculture investigation into the events that led to Golden Vale being hit with that £3.1 million superlevy fine is ongoing but the scale of that fine and the nature of the investigation means that Mr Murphy will have to radically reform Golden Vale's milk collection systems.

His experience as director of milk procurement of Express Foods in Britain means that Mr Murphy has detailed experience of milk collection in Britain. Whether that experience in the British dairy industry is immediately transferable to rural Ireland will become clearer after he takes over.

At the operational level, Jim Murphy will also have to take a close look at the Vonk processed cheese plant in Holland - bought expensively for around £30 million in 1993. Vonk has been the subject of serious rationalisation and is now a much slimmed down outfit - at least compared with its condition when Golden Vale took over.

But it is by no means clear whether enough has been done to convert Vonk into an operation that will provide Golden Vale with an adequate return and it is understood that Coopers & Lybrand is currently carrying out a detailed study of Golden Vale's entire operations in The Netherlands.

Likewise, the Leckpatrick operations in Northern Ireland - another expensive buy - will undoubtedly come under the Mr Murphy's management microscope. High milk prices in the North has caused havoc with Leckpatrick's margins, but with input prices coming down to more rational levels Leckpatrick is more likely to make an adequate contribution than Vonk.

Golden Vale also has to carry out an image repair job on Leckpatrick - the subject of a £77,000 compensation award to a former employee who successfully accused the Golden Vale subsidiary of religious discrimination.

On the management side, the exclusion of the young but highly regarded consumer products manager Liam Woulfe from the chief executive selection process rankled with those on the Golden Vale board who opposed the dismissal of Jim O'Mahony six months ago.

Mr Woulfe and finance director Liam Irvine - who was acting chief executive after Jim O'Mahony's departure but is understood not to have applied for the full time position - will undoubtedly require reassurance that they have a future within the group. Given the faction fighting that surrounded the O'Mahony dismissal, informed sources believe that Mr Murphy will be at pains to try and restore working relationships at the upper management level.

At the age of 50, with his future financially secure - Mr Murphy was one the management beneficiaries of the Waterford Foods takeover of The Cheese Company - many observers now wonder why he is leaving a senior food industry position to move into a potential managerial minefield like Golden Vale.

Some say that after 20 years in Britain and with his three children now grown up, he simply wants to return to Ireland and finish his managerial career at home.

Others say that he relishes a challenge. If so, he will not be disappointed there is hardly a bigger challenge in Irish corporate life than turning around Golden Vale.