€60 million package of cash flow supports announced for Glanbia Co-op members

Details of a potential €60 million package of cash flow supports for Glanbia Co-operative Society members have been announced today (Tuesday, May 1).

The measures include proposals to increase the ordinary share interest (co-op dividend) by 30% and a new Patronage Support Fund of €20 million for active members, as well as the launch of the 2018 Glanbia Advance Payment Scheme.

The proposals regarding the co-op dividend and the Patronage Support Fund will be voted on by members of Glanbia Co-op at the upcoming Annual General Meeting (AGM) – which is scheduled to take place at the Newpark Hotel, Castlecomer Road, Kilkenny on Wednesday, May 30, at 11:00am.

Recommendations

The board of Glanbia Co-op will be recommending a “significant increase” in the co-op dividend paid to all members at the AGM.

If approved by members, the co-op dividend will increase by 30% to 13 cent per Glanbia Co-op share – the ordinary dividend in 2017 was 10 cent per share.

As well as this, the board is set to seek members’ approval for the creation of a new Patronage Support Fund, through the allocation of €20 million to the fund from the co-op’s existing cash resources.

It is planned that the fund would be for the benefit of active members who supply to, purchase from or trade with the Glanbia group.

“If approved, the nature and timing of any payments from this fund will be at the discretion of the board of Glanbia Co-op.

“This new Patronage Support Fund will be in addition to the existing €30 million Member Support Fund for active members which was approved by Glanbia co-op members at a Special General Meeting held in Punchestown in May 2017,” a statement from the co-op explained.

A key pillar of the strategy of Glanbia Co-op is to support its members, the co-op’s chairman Henry Corbally said.

Commenting on these proposals, he said: “If approved, the 30% increase in the ordinary share interest paid by the co-op will benefit all members.

“In addition, the proposal to create a new Patronage Support Fund will significantly enhance the existing funds and – in total – provide up to €50 million to support our active members over the coming years, enhancing cash flow on farms in times of challenging conditions.”

2018 Glanbia Advance Payment Scheme

Meanwhile, the 2018 Glanbia Advance Payment (GAP) Scheme was also launched today. This scheme is set to offer up to €38 million interest-free cash flow support to milk supplier members.

First made available in 2016, this scheme is part of a suite of innovative mechanisms developed by Glanbia to help its member-suppliers cope with income volatility.

“Participation in this voluntary scheme allows members to draw down cash flow support from the GAP Scheme when the Glanbia Ireland (GI) market price for manufacturing and liquid milk falls below specific levels or ‘price triggers’.

“The interest-free repayments to the GAP Scheme are triggered when markets recover above specific levels,” the co-op added.

How does it work?

For participating milk suppliers, the 2018 GAP Scheme will automatically advance a payment of up to 2c/L on liquid and manufacturing milk supply – excluding volumes in current fixed milk price schemes – in any month where the base GI manufacturing milk price (including VAT) falls below 30c/L.

The trigger for commencing interest-free ‘return’ payments to the GAP Scheme is a GI base manufacturing milk price of above 31c/L including VAT.

Return payments will be set at a maximum of 2c/L per month, the co-op added. More details on the scheme can be found on Glanbia’s website.

Glanbia Co-op is “determined” to take steps to protect its members from the worst impacts of dairy market volatility, Corbally added.

Concluding, he said: “The 2018 GAP Scheme can provide vital cash flow to our dairy farmer members, with interest-free repayments required only in better market conditions.

“It is a positive and practical response to price volatility that worked very successfully for our participating milk supplier members in 2016.”