Glanbia scheme will 'put pressure on the banks'
Glanbia is following a clear strategy of supporting the "growth ambitions" of dairy farmers, the company's managing director Siobhan Talbot has said.
Her comments came after Agriculture Commissioner Phil Hogan said producers have to take their "share of responsibility" in reducing supply to bring about a balance in the market place.
As part of the Glanbia strategy, Ms Talbot said the new Glanbia Advance Payment (GAP) scheme providing €55m interest-free cashflow support running from now until December 2020, was about sustaining dairy and grain suppliers "through the low part of cycles" as the markets were cyclical.
The move was welcomed by farm bodies, with the ICMSA describing the scheme as "imaginative".
Agriculture Minister Michael Creed said the scheme would put "pressure on the banks" as he criticised the lack of a "functioning competitive banking market".
Mr Creed said he would be meeting with the heads of the pillar banks in the coming weeks to urge them to show "forbearance" as they deal with individual farmers.
He warned the "cashflow and cost of credit" to the farming community was too high compared with other European countries.
The Glanbia Co-op raised €100m by issuing a five-year exchangeable bond linked to a pledge of 4.3 million Glanbia plc shares. It will allow dairy farmers a voluntary maximum advance of 2c/l in a month where the base price falls below 24c/l. Repayment will be triggered when the price moves above 30c/l or alternatively in 2020.