Glanbia’s recent move to offer low-cost loans linked to milk prices has turned up the pressure on the main commercial banks to offer a similar product.
Many industry commentators are now saying that Glanbia’s move has ‘spooked the banks’ and there is now significant concerns within the pillar banks that that they could lose some of their most lucrative business (farmers).
It is understood that the banks came in for a significant grilling at the recent dairy forum over their willingness to ‘step up to the plate’ through the current dairy market strife.
Commenting on the Glanbia initiative ICMSA Dairy Committee Chairperson, Gerald Quain, said that credit was due to the processor for coming forward with an option that demonstrated imagination and understanding.
The ICMSA Dairy Committee Chairperson said that the scheme was now the benchmark in terms of innovation and proactive planning and other financial institutions like the pillar banks and Co-ops should draw up similarly flexible and robust schemes that would allow their own hard –pressed suppliers to put their milk supply business on practical medium-term financing.
IFA National Dairy Committee Chairman Sean O’Leary said following Glanbia’s announcement that it must spark some serious rethinking by the conventional banks of the pricing and repayment structures of their own offering to all dairy farmers, regardless of which co-op they supply.
He said while this scheme addresses the need for investment financing, it does not deal with the most pressing issue of the moment: the need for well-priced, flexible short-term cash options.
“This is an area where banks really need to step up to the mark,” he said.
O’Leary said IFA would meet with all the banks on their short and long-term farm finance products in the coming weeks, and would expect a meaningful competitive response to this latest development, and to the current cash flow crisis on dairy and other farms.