Over €75 million in applications received by Glanbia’s MilkFlex Loan Fund

Over €75 million in applications has been received by Glanbia’s MilkFlex Loan Fund, with the co-op and its partners calling for further applications.

The loan fund is run by Glanbia, the Ireland Strategic Investment Fund, Rabobank and Finance Ireland. It offers flexible, competitively-priced loans to Glanbia milk suppliers with loan repayments which vary according to seasonality and movements in milk price.

The purpose of the fund is to provide Glanbia milk suppliers in the Republic of Ireland with an innovative funding product to support investment in on-farm productive assets. These include livestock, milking platform infrastructure and land improvement.

Glanbia and its partners are encouraging those interested in learning more about the fund to visit the Glanbia Ireland stand (Block 1, Row 11, Stand 255) at the National Ploughing Championships next week.

Members of the Finance Ireland team will be on hand to answer any queries that farmers may have about the fund.

Since its arrival on the market in May 2016, the fund has received loan applications in excess of €75 million. It has been revealed that the average value of loans drawn down from the fund is €100,000 to date.

The interest rate charged on the loans is a variable rate of 3.75% above the monthly Euribor cost of funds (with a Euribor floor of zero).

To date, the Glanbia MilkFlex Fund has proven very popular among the co-op’s milk suppliers, according to Glanbia Co-op Chairman, Henry Corbally.

“We are encouraging any suppliers who may yet be interested in applying to the fund to come and visit the Glanbia Ireland stand at next week’s National Ploughing Championships to learn more about the application process and so that the dedicated Finance Ireland team can answer any questions they may have.”

The MilkFlex loans have a standard term of eight years, but may be extended by up to a maximum of a further two years when volatility triggers are enacted.

The key features of the loan product are:
  • A six-month reduction by 50% in loan repayments, when the Glanbia Ireland (GI) manufacturing milk price falls below 28c/L (including VAT) for three consecutive months;
  • A moratorium on all loan repayments for six months, when the GI manufacturing milk price falls to or below 26c/L for three consecutive months – or when the outbreak of a notifiable disease reduces milk output materially on the previous year and;
  • An increase in loan repayments, when the GI manufacturing price goes above 34c/L for three consecutive months.

From a milk supplier perspective, other key features of the Glanbia MilkFlex Fund include the fact that loan repayments are automatically deducted from the supplier’s milk receipts by GI.

The profile of repayments will reflect the seasonal milk supply curve, with no loan repayments – interest or principal – during the low milk production months from November to February inclusive, Glanbia explained.

Glanbia suppliers can apply to draw down loans of between €25,000 and €300,000 from the fund.

Meanwhile, lending decisions are based on the merit of a farmer’s cashflow as opposed to the asset value of their farm – subject to meeting eligibility and underwriting criteria.

A certain amount of the fund is also set aside for new entrants to dairy farming, Glanbia added.

Finance Ireland manages the origination of loans from the fund and requires a clear business case in order to justify the lending decision.

Each applicant must meet eligibility and underwriting criteria. None of the other investors will be involved in lending decisions, or in the provision of advice or otherwise to individual suppliers in relation to participating in the fund, Glanbia concluded.