IFA Reaction to Glanbia Proposals

IFA President Eddie Downey has said that the proposals from Glanbia for a share spin out and the creation of a support fund for co-op members provides a potentially useful funding option for farmers, and an opportunity to take advantage of the current strong market value of Glanbia plc.

Eddie Downey said, “With the abolition of milk quota, many farmers are expanding, with a requirement for significant on-farm investment. In addition, some farmers are facing superlevy and tax bills. All of these issues will contribute to cash-flow pressures on some farms over the coming years. The Glanbia proposal for the share spin out provides an option for individual farmers to generate cashflow or investment financing, if required, while the proposal to create a members’ support fund will give the co-op board flexibility to respond to volatility and other pressures in the market”.

Mr Downey said that it was important that the support fund will be available to address issues faced by all Glanbia members, not just milk suppliers.

He said, “IFA is clear that the member support fund cannot be used to dilute the transparency of the milk price, which must continue to be based upon market returns”.

Mr Downey noted that the proposals, if carried, would result in a reduction of the co-op holding in Glanbia plc from 41.2% to 36.5%, with the option to further reduce the plc holding to 33% in the future without a further vote. It would also result in a reduction in the co-op representation on the plc board from the current proposed 8 by 2018 (of a 16 member board) to 7 (of a 15 member board) by 2020. However, the proposals do not impact on the current ownership structure or composition of the GII Joint Venture.

He continued, “The proposal to allow existing milk suppliers who are not Glanbia co-op members to purchase shares in the Glanbia co-op at €5 a share is positive, thereby giving them benefits of membership, including producer support and participation in the decision-making process into the future. Equally, where non-active shareholders wish to dispose of their co-op shares, there is now a straightforward mechanism, with a guaranteed price, through which to do so. However, given the funding pressures that will already be faced by existing milk suppliers, IFA believes that there must be flexibility in the scheduling of the payment for co-op share purchase”.

Mr Downey concluded, “IFA is advising all individuals who will be potentially affected to take the opportunities that will be presented over the coming weeks to fully inform themselves of the impact that the proposals would have on them individually in advance of the votes on the proposals scheduled for mid-May”.