Do the benefits of ‘Glanbia Ireland’ outweigh the concerns?

Following a meeting to discuss the proposed establishment of Glanbia Ireland, John Comer, President of the Irish Creamery Milk Suppliers Association (ICMSA), confirmed that the association would support the move.

Glanbia Co-op proposes to pay €112 million to acquire a 60% shareholding in Glanbia PLC’s Dairy Ireland division.

The ICMSA believes that the benefits, and potential benefits, outweigh the concerns that were expressed.

Regarding the meeting, Comer said that a number of specific issues were raised; notably, the costs of inputs supplied by Glanbia Agribusiness and the future of liquid milk producers.

Following the meeting, the ICMSA stated that there can be absolutely no link between the price of milk to suppliers and the purchase of inputs from Glanbia Agribusiness.

“Farmers operate in a competitive environment, where every euro counts, and they must be free to purchase their inputs from the most competitive outlets available.

The proposed new entity cannot – and must not – put any barriers to such competition and freedom to purchase from any source.

“The ICMSA has raised these matters directly with Glanbia who acknowledged the concerns and we’re confident that, if approved, the new entity will address these issues,” Comer added.

“In the event of Glanbia suppliers going on to approve the proposal, then it’s crucial that the new entity delivers for farmers; in terms of milk prices and competitively-priced inputs and vindicates the farmers’ decision to support the proposal,” he concluded.

Ahead of the vote, the Irish Farmers’ Association (IFA) President Joe Healy has urged Glanbia shareholders to make their vote count this Thursday.

Healy welcomes the proposal, noting how it would increase farmers’ control and ownership of Glanbia consumer foods, including liquid milk, and agri-business in Ireland.

The proposals also recognise the need for a more sustainable mechanism to support farmers through volatile product prices, while funding important investment to process additional milk output.

It is intended that Glanbia Ireland will combine Glanbia Ingredients Ireland (GII) and Dairy Ireland’s Glanbia Consumer Products and Glanbia Agribusiness as a joint venture – 60% owned by the co-op and 40% owned by the PLC.

Subject to approval, Glanbia Ireland will be a €1.5 billion diversified business.

It will be Ireland’s number one dairy processor and one of the top 10 dairy companies in Europe, with leading brands such as Avonmore, GAIN Feeds, Kilmeaden Cheese, Premier Milk, Mymilkman.ie and Wexford Cheese.

Speaking about the proposals, Siobhan Talbot, Group Managing Director of Glanbia said: “GII suppliers plan to supply 30% more milk in 2020 than in 2016. The financial strength of the Glanbia Ireland business will allow it to fund a €250-€300 million investment programme to 2020, without a requirement for supplier contributions.”

Glanbia Co-op shareholders will vote on a series of proposals at a special general meeting in Punchestown Event Centre, tomorrow (Thursday, May 18).
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