MIKE Magan is a fan of co-operatives.

Once the chairman of the Lakeland Dairies Cooperative in Ireland, the fifth largest dairy company in the country by turn-over in 2008, he said while believed in the co-operative model, some things need to change.

He said dairy co-operatives needed to look at their model of selecting directors if they wanted to move into the future and compete successfully.

"Better governance and a better standard of people to represent (farmers is needed)," Mr Magan said.

He said the industry needed to move on from the model where board directors were primarily selected because they represented a region.

These representatives should be selected on their skills and capacity to represent farmers and manage farmers' products, he said.

But Mr Magan said it was just the model that needed changing, not the philosophy, and recommended Australian farmers think long and hard about their future.

"Don't ditch it lightly. It's not a perfect model but it is the best for the farmer by which we can retain control and ensure we get more returns," he said.

"Every other model will supply other needs first."

Mr Magan, a dairy farmer and chairman of Animal Health Ireland, said Irish dairy farmers valued the co-operative system but as a nation, the Irish didn't devote much thought to it.

Rather, he said farmers were "feverishly" loyal to their local cooperative and credited cooperatives for increasing their milk price.

He said that, contrary to popular opinion, competition in the dairy industry "keeps the milk price down" and that often dairy companies paid a milk price on the basis of "what they are expected" to pay-the common price- rather than what they "can" pay.

Mr Magan told the Australian Dairy Conference at Wollongong last week that Ireland was ranked 31st in the world in terms of milk production and exported 80 per cent of its milk.

He said the Irish dairy industry had a "fragmented' structure with 30 dairy societies and 13 involved with milk processing.

"While the industry has some strong companies with a global scope, Irish dairy farmers would benefit from further consolidation," he said.