Only surprise is that farmers are surprised about IFA boss’s pay

Every now and then something comes along that gives you a real insight into how Ireland works, or doesn't work, depending on your perspective.

One of those moments was the announcement last week that the general secretary of the Irish Farmers’ Association was to resign amid concern about his pay package.

Pat Smith earned €445,000 last year and €535,000 the year before that . It is an eye-watering amount of money, particularly when you consider that the IFA's income is about €13 million a year, mostly in the form of subs from its 88,000 members, plus some business interests and factory levies.

The first question that springs to mind is why was he was paid so much?

The IFA has a pretty unconventional structure, including a 53-member executive council, but it’s reasonable to assume Smith was not left to set his own salary.

The position is accountable to the council, according to the IFA, and the general secretary is also a member of the executive board, which is led by the IFA president, along with the deputy president and four regional chairmen, all of whom are elected.

The point about this is they are all farmers, and one would assume on this basis alone they are not fools when it comes to money.

It is scarcely credible to argue the executive committee did not know what Smith was being paid, and so far nobody has tried.

The IFA top brass must have had some rationale for paying Smith such a large salary, and the IFA president Eddie Downey gave some inkling of what it might be on Friday when he announced Smith's resignation, which he described as "very regrettable and a great loss".

Best outcome

“His [Smith’s] capacity to develop trusted relationships with political and industry leaders and his negotiating and organisational ability has always delivered the best outcome for our members,” he said.

That is all fine and dandy, but it still doesn’t sound like €445,000-worth.

Where is the bumper profit, the shareholder dividend, or the successfully completed mega merger that usually goes hand-in-hand with such stellar pay packets in the private sector?

Nowhere, of course. But what you do have is the budget. Consider the most recent one, Budget 2016, passed by the Dáil last month.

It contained tax reliefs for farmers totalling more than €13 million. Put another way, IFA members will be paying €13 million less in tax this year than they theoretically should.

The actual measures need not detain us. Suffice to say they are targeted at encouraging “young farmers” to invest and expand their farms.

The €13 million secured in the current budget pales compared to the almost €32 million in tax breaks for farmers contained in the 2015 budget.

We can reasonably assume the Minister for Finance did not just wake up on the morning of the budget and decide to give away our money to farmers.

He was lobbied and he was lobbied well, and it was by Smith and others.

The budget is only the most tangible manifestation of Smith’s work on behalf of the IFA, with its avowed mission “to improve the incomes and conditions of all farm families”.

Barely a week will pass without the IFA berating some Minister to hurry up and pay grants or telling milk suppliers to increase prices.

When you measure Smith’s pay packet up against the €45 million in tax breaks he helped secure over the past two years alone, it starts to look like reasonable value by the warped metrics of private sector executive pay.

Few Irish executives could claim to have delivered €45 million for 88,000 shareholders over the past two years.

Faustian bargain

Perhaps the most interesting question raised by the departure of Smith is why his members were unhappy about his pay. But they were.

The pressure to disclose his salary came from the grassroots, with local organisations in Carlow, Cork, Cavan, Louth and elsewhere all looking to be told what he earned, with the inevitable consequences.

Why didn’t they understand the Faustian bargain they had struck? They paid Smith a lot of money and he got them a lot of money.

Perhaps the answer lies in the IFA’s rather romantic vision of itself as some sort of national cultural icon, the guardian of rural Ireland and all that.

When you see it as most of us do - a machine for squeezing money out of the taxpayer for its members - Smith’s salary is no more or less troubling than that of any other successful executive.