Glanbia milk suppliers to decide on extended contract agreement
Any supplier wishing to leave the company must provide two years’ notice from January 2018, the Kilkenny processor has confirmed following a meeting with its suppliers’ council yesterday. The company said the agreement is intended to reward supplier loyalty. A €2.5m loyalty fund will be created for those signing the agreement.
This fund will be based on milk volume supplied in 2013 and will approximate to 1cpl (cent per litre) on June 2014 milk supply. The fund will be paid in full in July to those suppliers who have signed the agreement.
The company has already dropped the proposed capital contribution of 2cpl on supplier’s growth, which would have amounted to €60m over five years.
Glanbia Co-op chairman, Liam Herlihy, said: “After 18 months in operation, we have not only the financing capability and the flexibility afforded by this new ownership structure, but also a healthy bedrock of positive engagement to support our milk suppliers in our shared growth aspirations.”
Mr Herlihy said the agree- ment responds directly to feedback received from suppliers and will, he hopes, form the basis of a long- term, sustainable partner- ship into the post-quota era. Suppliers who sign up for an agreement will be eligible for the company’s future index- linked fixed-milk price schemes and other price volatility schemes.
Chief executive, Jim Bergin, added: “In a post-quota environment, where milk volumes are anticipated to expand rapidly, it is in the interest of all stakeholders that we have as much certainty as possible for our suppliers and our global customers in terms of the volumes of milk produced on farms, as well as how it will be assembled, processed, marketed and sold.
“By 2015, Glanbia Ingredients Ireland Limited will have invested a total of €300m in its existing and new facilities on behalf of its suppliers.”
The company is to send the agreement to suppliers in the coming week, to be returned by the end of June. The company is to hold a number of farmer information briefings.
ICMSA deputy president, Pat McCormack, welcomed the move and urged all suppliers to engage as fully as possible with the process and acquaint themselves with every aspect of the contract: “Ultimately, this is a decision for every individual supplier... Glanbia Ingredients Ireland Limited have made very significant investments in increasing processing capacity and it is in everyone’s interest that this increased processing capacity is utilised to its maximum efficiency and that, in turn, the farmer-suppliers receive the maximum milk price.”
