The shareholders of the Nenagh and Midwest co-operatives have voted overwhelmingly for a merger of the two into a new co-operative, to be called Arrabawn.

In Nenagh yesterday 650 of the 2,200 shareholders who turned out to vote decided by a 97.38 per cent majority in favour of the merger, while about 300 shareholders of Midwest, who voted in Kilconnell, Co Galway, voted in favour by 84.09 per cent.

The results have to be confirmed at meetings to be held in both co-operatives on January 5th, but there is no doubt about the outcome. Given the sweeteners which were offered in advance of the vote, there was little uncertainty about the result of the vote either: a guarantee to suppliers of both co-operatives that the new co-operative will pay the Irish Dairy Board price for butter and skim milk powder, less a processing margin of 15p per gallon, for two years and a pay-out of £3.8 million (€4.83 million) from reserves to shareholders.

The new Arrabawn co-operative will have a milk pool of 51 million gallons and a combined turnover based on last year's returns of more than £105.5 million. Milk is drawn from suppliers in Galway, Tipperary, Offaly, Limerick and Clare. Nenagh is the larger with a turnover of £74 million. The headquarters of the new co-operative will be in Nenagh, with Mr James Murphy, the current chief executive there becoming chief executive of Arrabawn.

Reducing costs and improving efficiency has been the main thrust of mergers such as this, facilitated by the Irish Co-Operative Organisation Society. Savings of more than £850,000 a year are projected. But this will be conditional on world markets for milk products remaining as buoyant as they have been in the latter part of this year, given the high guaranteed price to be paid to farmers.

As a result of the merger, milk packing in Nenagh will be discontinued, but butter production will be centralised there. A new liquid milk processing plant will be established in Kilconnell and a despatch store at Oranmore, also in Co Galway. This will involve a once-off payment of £1.9 million.