Glanbia ponders next move after AGM vote
The implications of the vote of no confidence passed by shareholders of Glanbia Co-op in their board at the annual general meeting in Kilkenny are still being assessed within the food giant.
Various informed sources maintained there was no legal obligation on the board to resign, but others pointed to a precedent set by the board of Dairygold Co-op in somewhat similar circumstances two years ago.
All but one member of that society's board stepped down after a similar no confidence vote was passed by shareholders in its stewardship. Most of them were later re-elected.
The no confidence vote in the 15-member board of Glanbia Co-op, which has a 54% shareholding in Glanbia plc, the €1.8 million international dairy, foods and food ingredients company, was not unexpected.
A group of Waterford farmers had signalled their intention of doing so because of a 4c/litre March milk price cut and the impact that would have on their incomes.
But what surprised many observers was the overwhelming support on a show of hands that the no-confidence motion received from the estimated 350 shareholders present at the four-hour meeting.
Chairman Tom Corcoran told the meeting that in an attempt to create some stability Glanbia had decided to hold milk prices in October. That position will then be reviewed in the last quarter relative to the Common Agricultural Policy (CAP) mid-term review.
At the year-end the Board will take a view on the co-op's relative milk price position for the year.
He said the board acknowledges the expression of no confidence, which reflects farmer disappointment, and it will review all issues raised at the AGM.
Group Managing Director John Moloney said he totally accepts that farmers are at a most difficult juncture and have some extraordinarily difficult choices to make as a consequence of the mid-term review.
The EU Commission is very clear on the impact of dairy reforms on milk prices and this has been demonstrated by reductions in the EU dairy budget and by more support cuts.
"We are actively lobbying the EU Commission to review this direction, but this in itself is not enough. The reality is that there are three fundamental pricing issues: market pricing, aid/refunds and currency.
"In addressing all three we must do more than lobby. We must also invest in a strong dairy processing industry, in innovation, R&D and in new routes to market. Glanbia has a continuous focus on costs and efficiencies to minimise these impacts on suppliers," Mr Moloney said.
Paul Meade of NCB Stockbrokers said yesterday the company's comments were largely as expected. Glanbia is well advanced in diversifying its reliance on Ireland with the commissioning of two new joint venture investments in the USA and Nigeria this year.
"Maiden contributions will boost Glanbia's earnings in 2006 and deliver sufficient growth to more than offset declines in Ireland," he said.
Q: What prompted the no confidence vote by shareholders in the Glanbia Co-op board?
The co-op cut the price of milk it paid farmers by 4c/litre for March supplies.
: It is too early to predict. Experts say they are not legally obliged to do so. But some believe they may have no choice.
Glanbia will likely hold prices until end October and review the situation.
The group's shares rose by 1.15% yesterday.
It's unlikely. Market forces tend to set prices.
