Farm Ireland

Saturday 24 March 2018

Glanbia keep door open for Dairygold

Declan O'Brien

Declan O'Brien

Glanbia has not ruled out the possibility of some form of link up or co-operation with Dairygold to deal with expanding milk supplies post 2015.

Last week Glanbia announced outline plans for a joint venture between the dairy co-op and plc to create a new entity that would develop a processing facility at Belview Harbour near Waterford Port.

However, the head of Glanbia's Dairy Ingredients Ireland arm, Jim Bergin, said this move did not close the door on the possibility of working with Dairygold or other dairies on milk processing.


The fact that both processors were pressing ahead with their individual plans was "not a bad contingency", Mr Bergin maintained.

Planning for the Belview development is being lodged later this month and should be cleared in nine months even if it goes to An Bord Pleanála, Mr Bergin predicted.

He expressed confidence that the proposed facility, which is to include two 7.5t/hour driers, would be built and commissioned by the last quarter of 2014 or early 2015 at the latest.

Mr Bergin said the venture would cost in the region of €150m to €200m. He said this would include the working capital associated with the expected growth in milk supplies.

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On the 2c/l charge that is to be levied on all 'new' milk for five years to part fund the expansion, Mr Bergin said that a mechanism for paying back that money had yet to be agreed.

However, he said that "at this point" the company did not expect that it would be paying interest on monies held back.

The requirement for suppliers to forecast supplies for a three-year timeframe from 2015 had caused a reaction at regional meetings, Mr Bergin admitted.

However, he said this move was to enable the company to plan for the increase in supplies and was not an attempt to put a cap on milk production.

Glanbia milk suppliers who were contacted by the Farming Independent expressed the view that they would need to see the full detail of the plan and the funding arrangements before making a decision on it.

However, rumblings of discontent are already emerging among dry shareholders in Glanbia Co-op.

These centre on suggestions that 3.5pc of the co-op's shareholding in the plc, valued at close to €55m, could be used to fund the proposed joint venture.

Mr Bergin said it was unclear at this stage whether the final proposal would be cleared simply by the board of the co-op or go to a vote of shareholders.

But one dry shareholder said that while the board had the legal authority to sell part of the co-op's shareholding, they did not have the "moral authority" to do so.

Details of the full expansion package will not be finalised by Glanbia before the end of August.

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