THE birth of a billion-pound industry began, like all great enterprises, with a single step. While the south-east, particularly farmers, ponder the dizzy implications of the biggest co-op merger yet proposed - a link-up between Waterford Foods and the Avonmore Group - there are few still around who can trace the modest beginnings of this massive enterprise.
It is documented, however, that the present Waterford company may be said to have had its origins in a chance meeting of three farmers in Dungarvan in 1920.
These men, with four others, founded the Dungarvan Co-Operative Creamery. In the decades that followed other such local co-operatives came into existence, and in 1964 Waterford Co-Op was formed with the amalgamation of five of these, including the Dungarvan operation.
Although the local creameries and co-ops began to liberate the real potential for increasing Irish farm output and efficiency, the agricultural industry was coming from a long way behind its foreign competitors.
A paper produced for the occasion of the landmark meeting in Dublin of the British Association for the Advancement of Science in 1957 noted that the average annual milk yield per cow in Ireland was about 400 to 450 gallons, compared to 660 gallons in Britain. The Irish cow was yielding just over half the annual butterfat output of the cow in New Zealand.
The writers remarked upon "the basic weakness" of the dairying industry in the Republic, and judged that: "On the basis of existing milk yields and allowing for the sale value of surplus progeny, it is improbable that dairying is economic even at current prices for milk and butter."
As the young co-op movement expanded and flexed its muscles, the picture slowly changed.
Waterford Co-Op's growth was achieved through a policy of strategic acquisitions and opening new yoghurt and cheese plants and feed mills through the 1960s and 1970s. It went into high gear in the 1980s, and in 1988 almost all of its business activities were transferred to Waterford Foods plc.
An aggressive acquisition strategy continued, designed to increase the scale of the company's operations and to develop a geographical spread. However, funds were lacking, and Waterford went to the stock market. In 1988 shares were issued and by 1993 the company had raised £80 million in finance.
Analysts concede that the company has achieved growth that would have been impossible had it stayed a co-op. As the balance sheet improved, so did access to substantial borrowings. The acquisitions have now resulted in Waterford becoming the largest liquid (drinking) milk supplier and cheese manufacturer in Ireland, with interests and partnerships and manufacturing operations worldwide.
Farmers today look with some bewilderment at the gigantic and complex corporate enterprise their co-op has become. The older ones, however, remember the vastly liberating impact of the early co-ops on their own working patterns.
Maurice (Mossie) Murphy, who farmed near Carrick-on-Suir, recalls the constraints of working with a small local creamery. He was one of up to 80 farmers who supplied his local branch, each, for the most part, bringing no more than 20, 30 or 40 gallons: "The man that had 50 gallons was an awful big man".
"At that time we had to be up on a Sunday morning at 5 o'clock to make the creamery. Now, on a Sunday morning, they can get up at 8 o'clock. I was five or six miles from the creamery on a bad road. It would take the best part of half a day of the farmer's time himself.
"When you think of 80 farmers, each spending half a day bringing the milk, it didn't make sense, did it?"
Not only did the early amalgamations help to increase output and production, but they brought the phenomenon of the bulk tank - "the greatest thing ever," he says.
Whatever about the scale and implications of the present massive merger proposal, Mr Murphy says, he really welcomed the earlier amalgamations when they came. "I would be a total advocate, and I was always, of the amalgamation idea, the first day that it happened," he says. "We were always afraid - and maybe now at the moment too - of an outfit getting too big and reducing us, you see, to just a mere number.
"But I never found that. I think that the local co-ops tended to be dictatorial. They dispersed the medicine for us, if you know what I mean. I always found, since we joined the bigger group, that I never had any difficulties in meeting and discussing any problem I had at the very highest level."
Ciaran Kelly, of the Clonea area, also describes the advent of bulk tank collection as "a great relief". In his area there were a lot of small collection points, "which I don't think were very efficient".
The farmer's individual influence in the co-op or creamery can be exaggerated, from his experience. The health of the enterprise all depended on a good creamery manager: "The head men were the fellows that ran it. Local fellows had a say to a certain extent, but in the long run I don't think their say meant very much."
In the present scale of things, it is even harder for a farmer to function as a board member: "An ordinary person is not used to handling figures like £10 million or £20 million."
The analysts who look at the corporate development strategy of Waterford, however, question whether the implementation of the "growth through acquisition" strategy has been successful. Some judge that the organisation has not reconfigured itself for the changed situation, and that the elements within it have not performed.
"The plan was good; the delivery weak," observed one expert. "The stresses that arise within an organisation when it is changing, unless managed effectively, can wreck the strategy and ultimately the business.
"To manage the diversified organisation required a total transformation of Waterford Foods. The non-performance by the group across the board shows that the necessary management of the various divisions just did not happen. Any policy and strategy needs the people to make it happen at all levels of the organisation."
A WEAKENED business is easy prey, within the current environment of the dairy industry, according to this assessment: "Waterford has stopped being a predator and is now the hunted."
As for the present offer, the same observers concede that it looks good. But the ghosts of the fair day in Dungarvan are rearing their heads. The aspects that farmers throughout the county are talking about concern pride of place and a sense of rivalry with the neighbouring county of Kilkenny, the home-base of the Avonmore hunter.
Those attitudes of local pride and ownership will probably win out, as the Waterford farmer stake-holders hold the whip hand. But if the Avonmore approach fails, there will be others waiting in line.
Unless the company itself implements the drastic changes needed to redress the weaknesses that have made it vulnerable, then inevitably those other stakeholders - the investors and financial institutions - who now stand in the shadows of the farmer-members will force the amalgamation or takeover that three farmers in Dungarvan in the year 1920 could never have dreamed of.