Glanbia has established a new €55 million advance payment scheme, offering interest-free cashflow support to suppliers in periods when milk and grain prices are weak.
The move is aimed at cushioning farmers from the ongoing slump in commodity prices and comes as the European Commission prepares another suite of measures to support the sector.
The Glanbia Advance Payment (Gap) scheme was described by the company as a “dynamic volatility measure”. It will be in place between May 2016 and December 2020 with €50 million set aside for milk suppliers and €5 million for cereal growers.
Participation in the scheme will permit members to draw down cashflow support when the market prices fall below “price triggers” set annually by the board of Glanbia co-op.
Repayments will be triggered when markets recover.
The scheme is being funded by Glanbia Co-operative Society, which is to raise €100 million by issuing a five-year exchangeable bond against its shares in the dairy group.
‘Critical issue’
Speaking at the launch of the initiative Minister for Agriculture
Michael Creed
said: “
Cash
flow is a critical issue for farmers at present, in the prevailing difficult market conditions.”
Chairman of Glanbia Co-operative Society Henry Corbally said the Gap scheme was the latest initiative developed by the co-op to help its member suppliers cope with income volatility.
