New calf-to-beef scheme 'a closed loop' for farmers, claim grain merchants
Co-op and meat processor-backed calf-to-beef schemes could potentially "eliminate" competition in the feed business, a group of independent grain merchants have claimed.
Acorn Independent Merchants, which represents 11 grain merchants, has hit out at the recently launched Glanbia and Kepak 'Twenty20 Beef Club' calf-to-beef programme, which requires participating farmers to buy all inputs from Glanbia.
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Acorn Independent Merchants CEO Pat Murphy told the Farming Independent that no farmer should be tied in to any "closed loop scheme (that) is eliminating competition".
"Glanbia claim to have a unique circle - from inputs to farm produce - which gives farmers some golden access to better returns," he said.
"If a farmer signs up for the scheme, he's obliged to have all the inputs for his farm from Glanbia, without any competition. Competition is important for farmers. The farmer can't even talk to competitors.
"We don't believe in any closed loop. No one should be tied to any such scheme. No purchasers should make demands on suppliers to have a total closed loop."
Mr Murphy questioned why Glanbia can't pay the full market price for grain and fund it out of its own balance sheet.
In an open letter to Glanbia, Mr Murphy claimed "the media and farm organisations seem to have swallowed (the closed loop scheme) "hook, line and sinker".
He urged farmers to be careful when considering "signing up to any nicely packaged scheme" which would only be effective if "farmers are foolish enough to surrender their independence to pay inflated input prices and accept lower milk and grain prices while forgoing their rightful dividends".
A spokesperson for Glanbia said the Beef Club is an entirely voluntary offer and there has been strong farmer interest in it, and the reaction of competitors confirms it is a compelling offer for many beef farmers.
"All our voluntary farmer schemes in recent years have been oversubscribed," he said.
Meanwhile, Glanbia plc chairman Martin Keane has said it is committed to Ornua for "the long term".
"It's very important to protect our own investment in it (Ornua)," he told the company's agm last week.
"We own 25pc, proportionally, of the shares of Ornua, and the relationship has been in existence for a long numbers of years and we hope it will continue in that vein."
His comments come after the firm launched a premium grass-fed cheese product in the US last year, a move which some in the industry felt that Glanbia was going head to head with Ornua in the US.
Mr Keane also told farmer shareholders at the agm that the milk price issue would be addressed at Glanbia Co-op's agm on May 29.
One farmer, Seamus O'Gorman, complained: "Fuel prices have risen by 600pc since 1995, fertiliser by 14.5pc, meal by 13.2pc - and our price of milk is basically the same.
"As a business, how are we supposed to stay going at that?"
Farmers, he said, should be receiving a base price of 34c/L for their milk.
Just over 20pc of shareholders voted against a proposal to increase a salary hike for Glanbia managing director Siobhan Talbot and finance director Mark Garvey.