Glanbia brings forward 1.5c/l top-up to suppliers

Caitriona Murphy

Glanbia Ingredients Ireland Limited (GIIL) is to bring forward a top-up payment of 1.5c/l to some 2,000 of its suppliers who are on fixed milk price contracts.

With GIIL paying 37.5c/l for its normal milk supplies, the move will see fixed price contract milk receive a price of just under 36c/l for June supplies.

The top-up payment, which is part of the GIIL promise that fixed milk contracts will not lag the open market price by more than 1.5c/l, was due to be paid in early 2014.

However, a spokesman for GIIL said the board had decided to bring forward the payment in recognition of the cashflow pressure on farms since the spring.

He added that the board had also taken the view that the dairy market outlook suggested that the open market weighted average price was not going to change dramatically between now and the end of 2013.

"The outlook for markets is reasonably positive and prices are unlikely to fall dramatically before the end of the year," he maintained.


Letters confirming the top-up payment to fixed price suppliers will be delivered to farmers today and will continue to be paid on a monthly basis for the rest of the year.

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Some 45pc of Glanbia suppliers have signed up to fixed milk price contracts for an average of 30pc of their quota. Approaching the end of the first three-year scheme, it looks like farmers who opted for fixed prices will have received an almost identical price to the market price during the same period.

Meanwhile, Glanbia has noted a tightening of milk supplies in the past week as a result of the drought conditions on farms, although weekly supplies remain very strong, running at 8-10pc higher than 2012.

Dairygold milk supplies are running 11pc higher than last year week-on-week and, while it finished June 1.23pc under quota, it expects to finish July slightly over quota.

Good grazing conditions for most Kerry suppliers have eroded some of its quota shortfall, with the co-op running 5pc or 20 million litres under quota up to mid-July.

Kerry and Aurivo are now leading the way on milk price, on 38c/l including VAT, while Tipperary has joined Glanbia, Dairygold and Lakeland on 37.5c/l and Town of Monaghan remains on 37c/l. The latest Department of Agriculture figures show that up to June 30, Ireland was 2.6pc under quota after 750,915,870 litres (butterfat adjusted) were delivered to co-ops.


This shows a significant closing of the quota gap, because the country was 4.64pc under quota at the end of May.

ICMSA dairy chairman Pat McCormack urged farmers to be cautious, given that a superlevy fine remained a distinct possibility for the current quota year.

Although drought conditions and silage feeding would restrict supplies somewhat, Mr McCormack said farmers were likely to milk cows for as long as possible to boost cashflow and pay off bills.

"A superlevy could pose serious difficulties for individual farmers. Suppliers should consult with their processor and consider temporary leasing,of additional quota," insisted Mr McCormack.

Irish Independent

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