Glanbia scheme will 'put pressure on the banks'

Glanbia group managing director Siobhan Talbot.
Glanbia group managing director Siobhan Talbot.

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.

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Grain prices have already hit the trigger point with €20/t available based on the MATIF price trigger of €180/t of wheat. A price of €205/t will trigger the repayment.

Ms Talbot said they would do a credit assessment on grain suppliers, and the Co-op board will sit in early 2017 and decide how best to utilise the fund for 2017. Glanbia Co-op chairman Henry Corbally said so far 1,000 farmers have attended the workshop on their €100m MilkFlex loan fund launched earlier this year.

Mr Creed said there was no "silver bullet" to fix price volatility but they were looking at a whole series of initiatives including pressing for action on fertiliser tariffs at EU level.

It comes as the IFA found retail fertiliser prices are continuing to fall but prices are lower in the northern half of the country. John Coughlan urged farmers to shop around as a large bag of CAN delivered to the farm in the north Midlands comes in at €220, compared with €240 to €265 down south.

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