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Saturday 22 September 2018

Row brewing at Glanbia over milk price supports

Glanbia Ireland has a 2.4 billion litre milk pool from 4,800 suppliers
Glanbia Ireland has a 2.4 billion litre milk pool from 4,800 suppliers
ICSA's Edmond Phelan
Ciaran Moran

Ciaran Moran

The payment of milk supports by Glanbia Co-op to bolster Glanbia Ireland’s (GI) monthly milk price will be raised by shareholders at tomorrow’s AGM in Kilkenny.

Former ICSA beef chairman, Edmond Phelan, who is a Glanbia Co-op shareholder, said society members were unhappy with being used to prop up milk prices. 

“Why should Glanbia Co-op shareholders prop up the price? Glanbia Plc shareholders, mainly corporate entities, are the ultimate winners because the Plc will look more profitable by essentially getting raw materials at below the odds,” Mr Phelan maintained.

Meanwhile, the head of Arrabawn Co-op has predicted a “very positive” outlook for milk prices. 

Average milk price for 2018 could reach 34-34.5c/l, Conor Ryan told the co-op’s AGM last week.

Through the spring, Glanbia Co-op has paid a top up of between 2c/l and 3c/l to members for milk supplied to GI - the joint venture which runs Glanbia's dairy operation in Ireland, and which is 60pc owned by Glanbia Co-op and 40pc by Glanbia Plc.

The 2c/l top up is estimated to have cost Glanbia Co-op close to €4m for April alone when GI processed around 200m litres.

Mr Phelan pointed out that the milk supports benefited the 4,200 Glanbia milk suppliers but that there were around 10,000 further shareholders. "This year will potentially see a special dividend of 12c for co-op shareholders arising from the sale of Glanbia Co-op shares in the Plc. This is not the full value of the sale; instead some of this money is being diverted to schemes to subsidise milk price or grain price," he said.

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However, a Glanbia spokesman said the use of milk price supports had been approved by the co-op board in May 2017 and the policy was not unique to GI.

"Glanbia Ireland pays a market-based price based on a proposal that was approved overwhelmingly by society members in May 2017. In accordance with the model which was then approved, Glanbia Co-op 'ring fences' dividend monies received from Glanbia Ireland for the provision of supports back to active farmers and to reward loyalty. Again, this reflects a basic co-operative principle," the Glanbia spokesman stated.

He added that from 2012 to 2017, Glanbia Co-op had returned almost €700m in value to members. "As much as 85pc of the value that has been returned to members has been on the basis of shares owned and is 'non-patronage based'," the spokesman said.

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