Glanbia drops 2c per litre plan for milk suppliers post-quota

Glanbia has told its milk suppliers they won’t have to pay a proposed 2c per litre capital contribution to post-quota expansion.

The board of Glanbia Ingredients Ireland Limited (GIIL) has dropped the 2cpl levy as part of a package of measures to promote growth in milk supply post-2015, which it says will be in the long-term interest of both the business and milk suppliers.

The board has also created a €5m Manufacturing Milk Price Stability Fund in 2014/15.

GIIL chairman Liam Herlihy said: “As outlined at the many farmer shareholder meetings in 2012, the business anticipated that the 2cpl contribution from suppliers would raise c€60m from 2015 to 2020 (subsequently to be repaid).

“Given the scale of the GIIL investment in the Belview site and the existing business, our funding requirement remains the same. However, the board is confident we have the financing capability necessary to fund this investment, without recourse to our milk suppliers, which leaves them firmly focused on their on-farm requirements.”

Mr Herlihy described this move as a statement of confidence in the business, adding that GIIL’s new ownership structure has allowed the financing capability and flexibility to support these expansion-focused measures.

He said GIIL is uniquely positioned among international dairy processors in that it already offers a voluntary Index Linked Milk Pricing Scheme to milk suppliers. This allows suppliers to fix the margin on a portion of their milk for an extended period of time.

GIIL chief executive Jim Bergin said: “The decision to launch the Milk Price Stability Fund was taken having listened to our milk suppliers, who for many years have expressed a desire for a milk price fund that would be available when prices are not as robust, as was the case in 2013.

“The board of GIIL has therefore established this fund to support our milk supply base at appropriate times, at the discretion of the board. This decision reflects our desire to create the long-term conditions that support milk growth and we are pleased to have the flexibility within the GIIL model to do so.”

Glanbia will outline details of these and other initiatives at information meetings in the coming weeks.

GIIL is Ireland’s leading dairy ingredients company, processing 1.6bn litres of milk, or 30% of Ireland’s milk pool, into a range of dairy ingredients for export to more than 50 countries. It employs 530 and has market bases in Ireland, Germany, the US, Dubai, and Senegal.