Ireland-Creamery helps farmers.

IRELAND-CREAMERY HELP FOR FARMERS.

There has been a mixed reaction to Glanbia’s decision to make an €8m fund available to manufacturing milk suppliers in financial difficulties.

The monies will be paid in the form of a top-up payment on supplies over the next few months. It will subsequently be repaid, interest free, over the peak supply months of April to September in 2011 and 2012.

A spokesperson for Glanbia said the fund would help manufacturing milk suppliers facing severe cash-flow pressures due to the delay in grant payments and low milk prices.

She said the package had been very positively received by suppliers. But IFA president Padraig Walshe expressed disappointment that Glanbia could not do more to alleviate the pressure on suppliers.

Although ICMSA president Jackie Cahill welcomed the Glanbia move, he warned it would not be adequate to cover the collapse in farmer incomes.

Glanbia’s move followed the issuing of a profit warning last week. The company confirmed that earnings per share would fall from 36-37c to 30-32c.

Management said the decision to hold milk prices at current levels and provide aid for suppliers would push their Irish food ingredients operation into the red for 2009.

The company said the decision aimed "to help maintain our Irish dairy supply and trading base". However, this was rejected by the IFA.

"Glanbia has indicated that to hold a milk price at 20c/l, it had to issue a profit warning. This contrasts with many co-ops, operating in the same difficult dairy market, paying up to 3.5c/l more," Mr Walshe said.

"Supplier-shareholders have to question the wisdom of the Glanbia plc structure. Where is the value from the efficiencies, the scale and the diversification of the product mix that Glanbia farmers have supported?" Mr Walshe asked.

Meanwhile, the ICMSA said "ruthless" cost cutting is required from processors.

"Management must act ruthlessly to cut costs within their own businesses and give their farmer suppliers the savings made," Mr Cahill maintained.

"One thing is for sure: the pain has not been shared. Farmer suppliers are being told they will have to bear the burden on their own," he added.

The ICMSA leader repeated that a complete reversal of the Commission’s policy on the abandonment of milk quotas would be required to stabilise the European dairy industry.

- Declan O’Brien