'Glanbia needs to broaden income strategy': IFA
Published 20/05/2015 | 02:30
The IFA has urged Glanbia Co-op to develop "more broadly-based and sustainable revenue streams" beyond the spinning out of Plc shares.
The farm organisation's comments follow last week's vote by Glanbia shareholders to spin-out €170m of the Glanbia Co-op's shareholding in the Glanbia Plc.
In addition, the co-op agreed to establish a €68m 'members support fund' through the sale of four million Glanbia plc shares. The move reduces the co-op's shareholding in the plc from 41.4pc to 36.5pc.
While IFA welcomed the strong shareholder endorsement for the spin-out, dairy committee chairman Sean O'Leary said Glanbia Co-op had to develop alternative income-generating options other than sale of its plc shares in order to support milk prices.
"While our members were positive on the Glanbia Co-op package of proposals, they were keen that GII would focus on optimising efficiencies in the future, and only resort to co-op top ups in crisis situations.
"This is as important for Glanbia suppliers as it is for all other dairy farmers, whose milk prices are not unaffected by Glanbia decisions," Mr O'Leary said.
"Our committee members were also adamant that Glanbia Co-op needed to broaden its income-generating strategy to provide long-term support for members, other than the option of selling off Plc shares," he added.
However, Mr O'Leary accepted that Glanbia had clearly recognised the importance of releasing some of the value of the co-op's stake in the Plc through shares and cash to help farmers who wish to invest in expansion or need support with cash-flow at times of low profitability.
The IFA also "fully appreciated" the importance of allowing retired co-op shareholders to realise the value of their shares, and for suppliers to share up in the co-op, Mr O'Leary said.
Last week Glanbia Ingredients Ireland (GII) cut its milk price by 1c/l to 28.5c/l, the second such reduction in three months.
However, Glanbia Co-op has agreed to support the processor's milk price at 30.5c/l for co-op members who have signed a milk supply agreement (MSA).
The GII decision has provoked strong criticism from the ICMSA who described it as "unjustified and a major disappointment".
"This is a critical juncture for the Irish dairy farmer and it is extremely disappointing that the largest processor in the country is leading the way in cutting milk price when all other processors have held price at or above 30c/l," ICMSA deputy president Pat McCormack said.
"Glanbia are a global brand and have invested large amounts of money into processing capacity and as a global leader they should be leading the way in Ireland in terms of price at the top - not the bottom.
"A milk price of 30c/l is fully justified from the market and co-op support should not be needed," said Mr McCormack.