New €100m loan fund for dairy farmers to combat price volatility

Glanbia’s new finance product offers more flexible repayment structures

Global milk prices have fallen by nearly 40 per cent since 2014 on the back of a glut in production, a fall-off in Chinese demand and the Russian trade ban.

Global milk prices have fallen by nearly 40 per cent since 2014 on the back of a glut in production, a fall-off in Chinese demand and the Russian trade ban.

 

A new €100 million loan fund offering dairy farmers more flexible repayment structures to help them cope with price volatility has been established.

Glanbia has teamed up with the Ireland Strategic Investment Fund, Rabobank and Finance Ireland to offer suppliers finance with inbuilt “flex triggers”.

The Glanbia MilkFlex Fund adjusts the repayment terms on loans in line with movements in prices so as to provide farmers with cash flow relief when they need it.

Global milk prices have fallen by nearly 40 per cent since 2014 on the back of a glut in production, a fall-off in Chinese demand and the Russian trade ban.

The slump has wiped more than €800 million off the value of Ireland’s dairy sector seen average incomes drop by up to €35,000.

Rabobank, the Ireland Strategic Investment Fund, Finance Ireland and Glanbia Co-Operative Society plan to invest in the fund while Finance Ireland will originate and manage the loans, which will range from €25,000 to €300,000.

When milk prices fall below 28 cent a litre for three consecutive months, repayments will be temporarily reduced. A milk price below 26 cent a litre will trigger an automatic moratorium on repayment while milk prices above 34 cent will prompt an increase in loan repayments.

EU Commissioner for Agriculture and Rural Development, Phil Hogan said: “This new model of funding for milk suppliers is an international first and will mitigate the investment risks for milk suppliers.”

Minister for Agriculture Simon Coveney said: “While any decision to invest must be based on sound financial planning, it is important for farmers to be able to access affordable financing in a timely manner.

Glanbia managing director Siobhan Talbot said:“This product is designed to match the cash flow generated by a dairy farm enterprise, with no repayments during certain times of low prices and increased repayments at times of high prices.”