Glanbia Ingredients Ireland Limited (GIIL), one of Ireland’s leading dairy ingredients companies, has this week agreed a package of measures to encourage and promote growth in milk supply which it believes will be in the long-term interest of both the business and its manufacturing milk suppliers. 

The GIIL board has made the decision to remove, in its entirety, a proposed capital contribution of two cent per litre, which was to be levied on milk suppliers based on new, or “growth” milk produced in the context of milk quota abolition in 2015.   The board has also created a €5m Manufacturing Milk Price Stability Fund, which will be available to stabilise milk price, if required, in 2014/2015. 

In a statement this afternoon, the company said: “As outlined at the many farmer shareholder meetings in 2012, the business anticipated that the two cent per litre contribution from suppliers would raise c€60m in the period from 2015 – 2020, which was subsequently to be repaid.  Given the scale of the GIIL investment in the Belview site and the existing business, our funding requirement remains the same. However the board is confident we have the financing capability necessary to fund this investment, without recourse to our milk suppliers, which leaves them firmly focused on their on-farm requirements.

According to Liam Herlihy, chairman of GIIL: “As an industry we are entering a new period of growth opportunity which we have not seen for many years. To this end we are focused now on encouraging milk growth in a sustainable manner and are investing behind our belief in a robust Irish dairy sector.   This is fundamentally a statement of our confidence in the business and we are very pleased that, after one year in operation, we have both the financing capability and the flexibility afforded by this new ownership structure, to support our milk suppliers in our shared growth aspirations.”

“We are uniquely positioned among international dairy processors in that we already offer a voluntary Index Linked Milk Pricing Scheme to our milk suppliers, which mean they can fix the margin on a portion of their milk for an extended period of time. The decision to launch the Milk Price Stability Fund was taken having listened to our milk suppliers, who for many years have expressed a desire for a milk price fund that would be available when prices are not as robust as was the case in 2013.”

Jim Bergin, CEO of GIIL said: “The Board of GIIL has therefore established this fund to support our milk supply base at appropriate times, at the discretion of the Board.  This decision reflects our desire to create the long term conditions that support milk growth and we are pleased to have the flexibility within the GIIL model to do so.”

Details of these and other GIIL initiatives, as well as an update on relevant  plc and society business will be provided  at the forthcoming Glanbia Group farmer information meetings to be held at the end of January and in early February.

Glanbia is in the process of building a €150m new dairy processing facility at Belview in County Kilkenny.