Affordable milk loans extended nationally
A lower-cost loan facility which provided €64m of credit to Glanbia dairy farmers since 2016 has been extended to dairy farmers across the country.
It is expected that the MilkFlex product will be available to farmers from June.
It will offer flexible, competitively priced loans with repayments linked to movements in milk price, thus protecting cash flows from milk price volatility.
Repayments are automatically deducted from the farmer’s milk receipts.
No repayments of interest or principal are made from December to March inclusive.
If the milk price is less than or equal to 28c per litre (cpl), including Vat, for three consecutive months, principal and interest repayments are automatically adjusted down by 50% for the following six months.
This can be activated up to four times during the term of the loan, which is eight years, but may be extended as much as two years by low milk price “triggers”.
With milk prices under 26 cpl for three consecutive months, all loan repayments are suspended for six months. This can be activated up to two times in the loan term.
With milk prices over 34 cpl for three consecutive months, loan repayments increase by 25% for the following six months. This can be activated up to four times.
If a notifiable disease outbreak reduces a borrower’s milk volume, the loan repayment will be suspended for six months.
The interest rate charged on the loans will be a variable rate of 3.75% above the monthly Euro interbank offered rate. A loan setup cost of 1.25% will be deducted.
Loans will be available for €25,000 to €300,000, unsecured, but repayments will be prioritised against milk cheques.
Lending decisions will be based on the merit of business plans rather than farm asset value.
Loans can be drawn down for investments such as dairy livestock, milking platform infrastructure, land improvement, energy efficiency and renewable energy, technologies that deliver on-farm efficiencies, and environmental investments.
Funding will be available for qualifying new entrants to dairy farming.
To qualify for MilkFlex, a supplier must maintain a valid milk supply agreement and be a co-op member.
Finance Ireland, Ireland’s biggest non-bank lender, will originate and manage the loans, which are backed by finance from the Ireland Strategic Investment Fund (ISIF) and Rabobank, a leading global food and agri bank.
At the MilkFlex launch on Tuesday, Agriculture Minister Michael Creed said it is important for farmers to be able to access affordable financing.
Phil Hogan, the EU commissioner for agriculture and rural development, said this new model of funding for milk suppliers was an international first in Glanbia in 2016, and it significantly mitigates investment risks for milk suppliers.
Finance Ireland will host a series of workshops with co-ops over the coming months, to provide information to supplier farmers interested in MilkFlex loans.
