The board of Glanbia has moved to create a stability fund that will help protect against “sudden change in market dynamics”.
The fund will be built up gradually under direction from the board, a company spokesperson told Agriland.
The money will be allocated to the fund from revenue generated by the organisation. It is envisaged that these funds would then be distributed, over a period, to suppliers if there was a sudden change in the market.
The stability fund is separate to the milk and grain price provision of €43 million, which was announced last month and, which is due to be paid out to suppliers over the next 12 months.
A stability fund is a mechanism used by Glanbia Co-op, and other organisations, to assist suppliers during periods of extreme volatility or uncertainty in the marketplace.
A Glanbia spokesperson said its stability fund will be created from April onwards.
The spokesperson told Agriland that while dairy market returns are currently at historic highs, there are also significant challenges to the price and availability of key farm inputs such as feed, fertiliser and energy.
“Subject to market conditions, it is intended to gradually build up a stability fund over the coming months,” the spokesperson said.
“Any funds accumulated in the stability fund would be paid out to suppliers at a later date to help protect against any sudden change in market dynamics.”
Back in 2013, Glanbia created a €5 million milk price stability fund (MPSF) during very strong dairy markets in the same year.
This was, subsequently, paid out to farmers when market returns fell.
“The balance of the MPSF, amounting to €2.6 million, was released to farmers in the June 2015 milk payment,” the spokesperson said.
The company said it had no further comment at this stage, on the stability fund, until it had had discussed it with its suppliers.