Glanbia suppliers facing a €10m superlevy clawback

The Glanbia plant in Ballyragget, Co. Kilkenny.
The Glanbia plant in Ballyragget, Co. Kilkenny.
Darragh McCullough

Darragh McCullough

The superlevy situation has worsened significantly this week, with suppliers to the country's largest milk processor now facing an oversupply penalty of close to €10m.

While Glanbia Ingredients Ireland (GII) refused to disclose the extent of the problem for individuals, the processor had taken in 34m litres over its quota as of yesterday.

With superlevy fines running at 28.6c/l, it leaves a significant proportion of the co-op's 4,400 suppliers with serious bills to pay out of their future milk cheques.

However, Glanbia suppliers are not alone, with the country's second largest milk processor, Dairygold, estimating that more than half of its 2,960 suppliers are over quota.

More than 30 suppliers are between 50pc and 100pc over quota, with a further 157 more than 25pc over quota.

Punitive fines

Kerry's 3,950 suppliers look set to escape the punitive fines, even though one in four will be over quota. A spokesman estimated that 84 suppliers will be more than 135,000 litres over, while 305 will be 45,000 litres over.

Lakeland Dairies expect to have more than one in three suppliers approximately 15,000 litres over quota on average. They have been deducting 20c/l from milk cheques since before Christmas for farmers who are seriously over their limit.

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Arrabawn have been deducting the full 28.6c/l from suppliers' cheques, with up to 40pc of the co-op's 980 suppliers facing a superlevy fine. The vast majority of these are more than 10,000 litres over, with 150 more than 50,000 litres over. Some individuals are more than 200,000 litres over, which would equate to a superlevy fine of more than €57,200.

Only Kerry, Aurivo and Town of Monaghan are expected to come in on or under quota this year, with a national superlevy bill heading for close to €20m. 2014 will be the last year of the quota system.

Meanwhile, it has emerged that more than 120 farmers have signed over their milk supplies to Northern milk processor, Strathroy.

At least 20 of the total are believed to be Glanbia suppliers, with rest comprising Wexford suppliers.

Indicative of resentment

"We'll have over 40 suppliers in the South starting to supply us from today (Tuesday), with another 83 or 84 suppliers due to start with us from July 1," said Strathroy boss, Cormac Cunningham.

The migration of nearly one-third of Wexford suppliers to the Tyrone-based milk processor is indicative of the resentment generated by the handling of the sale of Wexford Creamery to GII last year. The 326 shareholders voted to sell the business to GII for €20m last December.

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