€100 million in MilkFlex loans now drawn down by Glanbia farmers

The MilkFlex Loan Fund has this month surpassed €100 million in loans issued to Glanbia Ireland dairy farmers, Glanbia Ireland and Finance Ireland have confirmed.

The financial product – which was launched in July 2016 – was developed by Glanbia, Finance Ireland, the Ireland Strategic Investment Fund (ISIF) and Rabobank.

MilkFlex loans are now available through most dairy co-ops around the country.

MilkFlex won a European Award for Co-operative Innovation and is mainly used to fund investment in a broad range of qualifying assets on dairy farms. The average loan size is €90,000 and the term generally ranges from eight to 10 years, Glanbia says.

Commenting, Billy Kane, founder and chief executive of Finance Ireland, said: “This product is uniquely designed for dairy farmers and its success over the past few years testifies to the value of a flexible, accessible and competitive loan product in these challenging times.”

Application changes

Glanbia Ireland and Finance Ireland have recently agreed improvements to the application process to ensure there can be a two to three-week turnaround from farm visit to draw-down of loan funds. This application and approval process aligns to Covid-19 protocols, the processor explained.

Sean Molloy, chief growth officer with Glanbia Agribusiness, highlighted the challenges facing dairy farmers at present, including impacts of Covid-19 and drought conditions, which are affecting farm cash-flow, saying:

“It is against this backdrop that Glanbia Ireland would like to remind its suppliers that the MilkFlex product can be used to fund working capital.”

It was highlighted that Glanbia Ireland farmers who are participants in the Glanbia Extended Credit Scheme, launched in 2018, are eligible to apply, if they wish, for a MilkFlex loan.

The key components of the MilkFlex product include:
  • Competitively priced variable interest rate, set at 3.75% above one month Euribor with a Euribor floor of zero. Current rate is 3.75%. An arrangement fee of 1.25% applies (Annual Percentage Rate (APR) 4.18%);
  • Loan amounts from €25,000 to €300,000 available;
  • No asset security required (in the case of limited companies, a signed guarantee will be required);
  • Seasonal repayment schedule including no repayments from December to March inclusive;
  • Suitable for borrowers applying for the Targeted Agriculture Modernisation Scheme (TAMS);
  • Flexible duration for eight years and can be extended up to a maximum of 10 years, upon activation of volatility triggers;
  • Volatility triggers.

Glanbia outlined four triggers, which would activate under certain circumstances, as outlined below.

Triggers

Should the MilkFlex milk reference price fall under 28c/L for three consecutive months, for the following six months, loan repayments will automatically be reduced by 50%. This trigger is available four times over the period of the loan.

If the MilkFlex milk reference price falls under 26c/L for three consecutive months, for the following six months, loan repayments will be automatically reduced by 100%. This trigger is available twice over the period of the loan.

On the other end of the scale, if the MilkFlex milk reference price goes above 34c/L for three consecutive months, for the following six months, loan repayments automatically increased by 25%. This trigger is available four times over the period of the loan.

Finally, in the case of a notifiable disease outbreak – which reduces milk output by 30% from the same month a year earlier, the borrower can request a suspension of loan repayments for six months.

This last trigger is available twice over the period of the loan, Glanbia confirmed.