Farm Ireland

Tuesday 12 December 2017

Will €10k farmer payout be enough to get Glanbia's restructuring deal over the line?

Siobhan Talbot, Glanbia Group Managing Director pictured speaking at the Glanbia Co-Op Special General Meeting at Punchestown Event Centre in Co. Kildare. Picture Dylan Vaughan.
Siobhan Talbot, Glanbia Group Managing Director pictured speaking at the Glanbia Co-Op Special General Meeting at Punchestown Event Centre in Co. Kildare. Picture Dylan Vaughan.
The Glanbia Ireland joint venture will be an enterprise of scale, with a 2.4 billion litre milk pool, revenue of €1.5 billion, 11 processing plants and over 1,800 employees.
Ciaran Moran

Ciaran Moran

Farmers have been urged to attend Glanbia Co-op’s Special General Meeting today to make crucial decisions on the important proposed changes to the Glanbia structure.

Glanbia Co-op proposes to pay €112m to acquire a 60pc shareholding in the Plc’s Dairy Ireland division, which consists of Glanbia Consumer Products and Glanbia Agribusiness.

Glanbia Ireland will combine Glanbia Ingredients Ireland, Glanbia Consumer Products and Glanbia Agribusiness, as a joint venture 60pc owned by the Co-op and 40pc owned by the plc.  This builds on the Glanbia Ingredients Ireland (GII) joint venture established in 2012.

The Glanbia Co-op proposal will also distribute by way of 'spin-out' c.5.9m shares in Glanbia plc to all members of the Co-op and to create a €40m Member Support Fund. 

The value of the share 'spin-out' is an estimated €100m based on the Glanbia plc closing share price of €17.13 on Friday 17 February 2017.

This would be worth approximately €6,637 for a member with the average shareholding. For active dairy farmer members, the average value of the spin-out would be €10,791. 

Making the call IFA President Joe Healy said it is welcome that the proposals increase farmers’ control and ownership of Glanbia consumer foods, including liquid milk, and agri-business in Ireland.

“The proposals also recognise the need for a more sustainable mechanism to support farmers through volatile product prices, while funding important investment to process additional milk output,” Joe Healy said.

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While the company structure is of major importance, the key issue for farmers into the future is that Glanbia consistently pays leading base prices for milk and grain, and that inputs are competitively priced.

Joe Healy said Glanbia is one of the most important operators in Ireland’s agri-business sector, and its ongoing success is of vital importance to all Irish farmers.

Following a meeting of ICMSA officers in the Glanbia region to discuss the Glanbia Ireland proposal, the President of ICMSA, John Comer said that after a long debate on the merits and demerits, the view of the meeting was that ICMSA would support the proposal with the benefits and potential benefits outweighing the concerns that were expressed.  

Comer confirmed that a number of specific issues were raised at the meeting, notably the costs of inputs supplied by Glanbia Agribusiness, the future of liquid milk producers and a very clear view emerged from the  meeting that there can be absolutely no link between the price of milk to suppliers and the purchase of inputs from Glanbia Agribusiness. 

“Farmers operate in a competitive environment where every euro counts and they must be free to purchase their inputs from the most competitive outlets available so the proposed new entity cannot – and must not - put any barriers to such competition and freedom to purchase from any source. I

"ICMSA has raised these matters directly with Glanbia who acknowledged the concerns and we’re confident that, if approved, the new entity will address these issues”, said Comer.

“In the event of Glanbia suppliers following the ICMSA recommendation and – subject to the provisios mentioned – going on to approve the proposal then it’s crucial that the new entity delivers for farmers in terms of milk prices and competitively priced inputs and vindicates the farmers’ decision to support the proposal”, concluded Mr Comer.

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