Glanbia offering suppliers fixed price on some milk

GLANBIA, IRELAND’s largest milk processor, is offering its suppliers a fixed price of 28 cent per litre for a percentage of the milk they supply for the next three years.

The scheme, which is without precedent in living memory, was welcomed yesterday by the Irish Farmers Association which represents many of the company’s 4,500 suppliers.

The offer is being limited to 25 per cent of the total Glanbia milk pool and will apply to manufacturing milk, that is, milk for making butter, cheese and other product and not liquid milk for households.

Applicants will be required to supply a minimum volume of 15 per cent of their respective milk quota at this fixed price, which excludes VAT, for the three-year period from January 2011 to December 2013.

A company statement said the balance of milk supplied by farmers will be paid for at the prevailing Glanbia manufacturing milk price in the normal way.

“We are pleased to be able to offer this innovative new scheme to qualifying suppliers who want to manage volatility through a fixing mechanism,” said Jim Bergin, chief executive of Glanbia Ingredients Ireland.

“This is a welcome opportunity for suppliers, customers and for the business in that it allows for a level of planning and risk management that has not been available in the Irish dairy industry to date.”

The Irish Farmers Association national dairy committee chairman, Kevin Kiersey, said the offer to “hedge” a minimum 15 per cent of their milk was a positive move to address farmer concerns over price volatility.

Mr Kiersey said a stable milk price for three years would give farmers more confidence to invest in the future of their business. He felt the Glanbia proposal would suit many of their suppliers.