The window for applications for Glanbia Co-op’s MilkFlex loan scheme closed on Wednesday this week. Glanbia said it had received €106m in loan applications to the MilkFlex fund from farmer suppliers since the scheme was launched in May 2016.

The average loan value is between €110,000 and €115,000. More than one-quarter of all Glanbia Ireland milk suppliers have applied for funding as part of the scheme. Farmers primarily intend to use the funding to upgrade farm infrastructure, such as housing for cows, slurry storage and new milking facilities. Other farmers intend to use the funding to increase livestock numbers.

Loans drawn down by farmers under the MilkFlex scheme include triggers that adjust the repayment terms in line with movements in Glanbia Ireland’s manufacturing milk price and seasonality.

The MilkFlex loan scheme was launched in May 2016 as a collaboration between Glanbia Co-op and its partners Rabobank, the Ireland Strategic Investment Fund and Finance Ireland.

The loan scheme was originally due to run for one year, but was later extended until the end of February 2018.

What are the terms?

Farmers applying for loans under the scheme can use the funding for investments such as buying livestock, upgrading or building new milking infrastructure and land improvement.

No security is required on the loan, but a farmer supplier applying for a loan must maintain a valid milk supply agreement with Glanbia Ireland for the term of the loan.

The interest rate on the loans is a variable rate of 3.75% above the monthly Euribor cost of funds, which works out at 4.18%. Loans have a standard repayment term of eight years, but may be extended by up to a maximum of a further two years when volatility triggers kick in.

When the Glanbia Ireland manufacturing milk price falls below 28c/l (including VAT) for three consecutive months, loan repayments will reduce by 50% for a six-month period. Conversely, when the Glanbia Ireland manufacturing price goes above 34c/l (including VAT) for three consecutive months, loan repayments will increase.

Should the Glanbia Ireland manufacturing milk price fall to or below 26c/l (including VAT) for three consecutive months, repayments on the loan will cease entirely for a six-month period. All repayments are deducted directly from the supplier’s milk cheque.

The profile of loan repayments reflects the seasonal milk supply curve, with no repayments during the low milk production months from November to February inclusive.

Read More

Glanbia extends MilkFlex loan fund to end of 2017

20 minutes with Conor Boyle, general manager, MilkFlex with Finance Ireland