Glanbia has extended the closing date for its initiative to assist suppliers with significant milk volumes tied into fixed-milk-price schemes.

A spokesman for Glanbia confirmed that the voluntary scheme, which was due to close last Friday 15 April, will now remain open until this Friday 22 April. The number of suppliers to have taken up the Glanbia offer was not disclosed by the company.

Clarification on a number of details of the scheme have been provided to the ICMSA following discussions between Glanbia and the farm body over the last week, the association’s deputy president Denis Drennan told the Irish Farmers Journal.

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The voluntary scheme is targeted at suppliers who have more than 35% of their total milk volumes tied into fixed-price contracts. The scheme stipulates that:

  • Glanbia will increase the price paid on fixed milk for 2022 to a base of 40c/l (VAT inclusive) for all existing fixed milk price volumes above 35% of the farmer’s total supply in 2021.
  • In order to qualify for the 40c/l fixed milk price in 2022, farmers will be required to commit the same volume of milk to a new fixed milk price scheme for 2023 and 2024 at 38c/l. For example, if 100,000 litres of a farmer’s supply qualified for the increase to 40c/l for 2022, then the farmer will have to commit 100,000 litres at 38c/l for 2023 and 2024.

    • “The ICMSA welcomes the clarification provided by Glanbia and we would urge all suppliers in fixed-price-milk agreements to contact their Glanbia adviser on the implications of these clarifications,” Drennan said.

    Milk supplies at 40c/l will also qualify for bonus payments for solids, as well as the 0.5c/l sustainability bonus.

    Using the average milk constituents for 2021, the milk supplied at a base price of 40c/l in 2022 should qualify for bonus payments of around 5.55c/l.

    However, a number of Glanbia suppliers who are significantly exposed to fixed-milk-price contracts have been critical of new package.

    They are angry that the market adjustment mechanism, which took account of fluctuations in input costs, has been removed from Glanbia’s fixed milk price schemes.

    They also questioned the fairness of requiring farmers to commit to future fixed-price schemes at 38c/l, which is 8.5c/l below Glanbia’s current base price.

    However, Seán Molloy of Glanbia described the initiative as “an effort to help address the challenges faced by farmers with larger volumes contracted” under the scheme.

    Close to 2,000 of Glanbia’s 4,500 dairy farmers participate in fixed-milk-price schemes. In the region of 500 have more than 35% of their total milk volumes in such contracts.

    Many of these suppliers have suffered serious losses due to the hike in input costs over the past year, with most receiving base milk prices below the cost of production.

    The average return from fixed-milk-price contracts with Glanbia is 31c/l. However, the average cost of production has increased to 34c/l excluding labour.