'We must embrace the frredom and the opportunities of post-quota landscape'
Published 31/10/2012 | 06:00
Having attended three of Glanbia's information meetings, I feel compelled to write this letter. One common theme among the people opposing the restructuring proposal is their complete misrepresentation of the facts.
This is coupled with the fact that most of the 'antis' are working from a fixed position and no matter what proposal is presented, they seem hell-bent on opposing.
These are 'smoke and mirrors' tactics, where in most cases they seem to add two and two and get 22.
What really confuses me and indeed many other shareholders is that many of these people are the first to criticise the PLC when milk prices falls, yet at these meetings about restructuring they talk up the great price that the PLC pays. They could at least try and be consistent?
We also have the issue of the four dissenting board members. These directors are elected to run our business and have totally abdicated their responsibilities. Some hail them as heroes, but I categorise them as lacking leadership.
They have produced no counter proposal; their attitude is just 'no to change'.
How can these directors hold this position when one considers that quotas are almost a thing of the past.
What really worries me is that they cannot lead us into this exciting new era with any degree of confidence. They prefer to sit back and urge us to say no, to resist change.
Would you consider this a good example to the record numbers of young people preparing for a challenging yet rewarding career in agriculture?
We are being asked to make a big decision, but when all the fog has cleared it is essentially a very simple deal.
We are being asked two questions here:
1.To sell 3pc of our stake in Glanbia PLC and to use these monies to create a new joint venture -- called Glanbia Ingredients Ireland (GII) -- that will be owned 60:40 by the co-op (farmers) and PLC (investors). However, this new entity will have a debt of approximately €120m, including working capital, and approximately €70m in other finances.
2.We are also being asked to sell a further 10pc of our holding. Of this, 7pc will be shared amongst the co-op shareholders and the remaining 3pc will be used to ensure that GII will be debt free.
Now is that not a great position to start a new business from?
Furthermore, this new business at Belview in south Kilkenny can be fully supported by the existing administration systems in Ballyragget so effectively it is a bolt on business,
As a dairy farmer, I know who I would prefer to have paying me for my milk.
I suspect that if all dairy farmers asked themselves the same question they would also conclude as I did -- it's better for a co-op to be paying for my milk and not a PLC.
Our PLC is a very well run organisation which has created massive wealth for all its investors and indeed for the co-op.
Now is our chance to partake in some of this wealth.
A fact worth noting and never mentioned by the nay-sayers is that globally 21 of the top 25 dairy companies are co-ops.
Our PLC excels at what it does, providing a return to investors by being one of the leading food ingredient companies in the world.
I am afraid to say that it fails miserably when it comes to paying for the one thing that I sell, that product being milk.
Regarding the joint venture, there is a vast amount of experience already in the company in running such arrangements (i.e. no time lost learning a new way of doing business).
A fine example of this is the South West Cheese joint venture in New Mexico.
Since 2006 we have had the worst of both worlds: a milk price on the world market and a cap on what we can produce due to milk quotas.
We are completely hamstrung and have no way of producing extra product to help our businesses dilute our fixed costs.
Going to meetings one would be led to believe that the only shareholders in Glanbia Co-op are dairy farmers.
We of course have many shareholders who do considerable amounts of business with the company.
These people do their business despite being able to sell their produce elsewhere -- now that's what you call loyalty.
This loyalty is to be rewarded in this proposal, in the form of the share spin-out. I will say to the no campaigners that these people are quite entitled to share in the success of the company that they helped build. In fact, I am certain that they will turn out in large numbers to exercise their right to vote.
I will urge all co-op members to get as much information regarding this deal as possible because it is us who decide our own future.
First you should read the literature carefully. Sit down and discuss it with your family, because this is a decision for the long term. The facts are in the literature, not elsewhere.
These are the true figures unlike some of the junior infant maths that get trotted out at meetings.
We have told Glanbia in a survey in 2011 that we want to produce more milk. This proposal ensures that this will happen.
The average age of a Glanbia supplier is 53, therefore most have supplied little or no milk in a quota-free environment. The prospect of the quotas being removed is truly something to be embraced.
Most of our board members are showing leadership, I am not asking for us to follow, but for us as co-op members to lead from the front a charge that will set up the next generation.
The people who went before us did a great job in what they achieved. Now it is our turn to have the courage, vision and strength to establish our legacy for the next 30 years, despite what the nay-sayers may argue.
This year must go down as one of the worst ever for dairying so let's end it in a positive way by turning up in great numbers to endorse this proposal.
Farming is not a sprint, it is a marathon. We may suffer setbacks but we rise and fight on, knowing it we are doing it for for the next generation as the previous generation did it for us.
Paul Hyland farms in partnership with his brother at Bordwell, Ballacolla, Portlaoise, Co Laois.
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