FMP proposals for Glanbia still alive

PROPOSALS to take Glanbia plc back into a farmer-owned co-op have not gone away, despite a warning that the move could risk the food giant's future survival.

Fresh Milk Producers (FMP), the group urging the move, is going ahead with a number of farmer meetings over the coming days. Glanbia co-op council and board members have also been invited to attend.

But Glanbia chairman Tom Corcoran said in a letter to farmer members that the co-op board fully considered all aspects of the FMP suggestion and concluded this action would not be in their best interests.

He warned that the initiative would freeze Glanbia in time, restricting its ability to respond to rapidly-changing markets and risk the survival of the organisation in a period of great turbulence following the CAP reform agreement.

But the FMP remains critical of the milk price paid by Glanbia since it was formed through the merger of the Avonmore and Waterford groups, claims it has not delivered to farmers and will not do so going forward as a plc. FMP chairman Eamonn Bray said it is obvious that farmers are anxious to hear all the facts on the proposal.

The idea in holding the meetings is to allow for a full and open debate among Glanbia Co-op farmer members.

The producer group believes that converting Glanbia plc into a farmer-owned co-op will ensure that active farmer members will have a more secure and viable future. The meetings will be held at 8pm in Dungarvan (Lawlors Hotel) tonight; Carlow (Seven Oaks) next Tuesday and in Navan (Newgrange Hotel) on Wednesday, July 30. In his letter to co-op members, Mr Corcoran noted that the FMP suggestion is that the board of the co-op should arrange financing to facilitate a new co-op to buy out the 45.2% of plc shares not held by Glanbia Co-op.

The holding of Glanbia co-op in the plc would then also be transferred into this new co-op. Under the submission, the buyout would be funded through new borrowings, which, at the current share price, could amount to about €340 million.

Mr Corcoran claimed the level of new bank borrowings would bring the organisation back to historical high levels, making debt repayments more important than anything else including milk price.

Noting that the submission makes no reference at all to milk price, he said clearly the proposed new debt obligations would place additional pressure on milk price. The KPMG milk price audit for 2002, and the years since merger, shows the Glanbia milk price to be extremely competitive. Mr Corcoran pointed out that farmers are well represented in Glanbia. They hold 70% of the seats on the plc board. Overall, he argues, the document is a distraction when Glanbia and its producers are facing great challenges from CAP reform, WTO negotiations and the Prospectus report on restructuring the Irish dairy industry.

"We have made great strides in the past five years to rationalise our operations, reduce the debt and refocus Glanbia around growth in core dairy activities and build an internationally competitive business. Now is not the time to turn the clock back," he stated.

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