Glanbia urged to create reserve fund to support milk producers in difficulty

GLANBIA, the €2.2 billion turnover global food group, was urged yesterday to set up a multi-million-euro reserve fund to support milk producers in difficult times.

The suggestion was made at the annual general meeting of Glanbia plc, attended by about 300 shareholders in Kilkenny, as dairy farmers vented their fury at the price they are being paid for milk supplies.

Farmers warned at the sometimes lively meeting that they cannot produce manufacturing milk below the cost of production and called on the board to revisit the milk price it is paying.

Others questioned the performance of the board, suggested the co-op should be separated from the plc and contrasted what they described as excessive salaries paid to executives, with suppliers getting what they termed as “one of the worst milk prices in the country”.

Joe Malone, of Piltown, Co Kilkenny, suggested €10 million out of every €50m profit made by Glanbia be put into a reserve fund that could be used to support producers in difficult times.

The group was also urged to challenge the supermarkets to ensure liquid milk producers get a fair price.

Chief executive John Moloney said Glanbia has significantly reduced manufacturing milk price, but the market returns were at a level above which this business unit can break even.

However, he believed dairy markets appeared to have bottomed out and he expected a modest recovery early next year.

Mr Moloney said based on market conditions, the group expects 2009 earnings to be in a range of low to mid-single growth.

“Glanbia is continuing to maximise organic growth opportunities and aggressively manage costs to sustain the business through the current challenging environment,” he said.

The group, which is the country’s largest milk processor, pays a milk price of 21.04c/l inclusive of VAT.

It has made available €8m to manufacturing milk suppliers, which can be drawn down by way of loan in 2009 and repaid over a three-year period.

This fund would amount to 2c/l in the milk cheque for April, 2c/l for May and 1c/l for June for those wishing to avail of it.

Farmers, however, dismissed this fund as “an insult” and called for the payment of increased milk price to suppliers instead.

IFA deputy president Derek Deane said producers have been driven to breaking point by the continuing policy of forcing down prices, while Waterford ICMSA chairman Tom Ahern said: “These are difficult times and we need help.”

Pointing out that Glanbia had paid a competitive milk price in the past, chairman Liam Herlihy said he appreciated the present price does not work for farmers or processors due to the difficult market situation.