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Peak Supply Management Policy amended at Glanbia Ireland

Glanbia Ireland has announced a number of amendments to its mechanism to manage the rate of growth in peak milk supplies from next year.

John Murphy, Chairman, Glanbia.

Among the new measures announced is a €6.7 million Voluntary Peak Reduction scheme that will be funded by Glanbia Co-operative Society.

Chairman, John Murphy, said that Glanbia Ireland has listened carefully to feedback from a series of meetings with the Co-operative’s representative structure and other stakeholders.

He said that the Board and management is acutely conscious of the impact that the delay in bringing a new cheese plant into production is having on individual farm families.

“We find ourselves in a place none of us want to be. Our investment plans are delayed as a consequence of a Judicial Review of a planning approval for our proposed Belview JV facility. Our existing facilities and cooperation with other processors can facilitate some milk volume growth at peak, but not at the level that matches our farmers’ production plans for next year.”

Among the new measures agreed by the Board are:

  • A Voluntary Reduction Scheme which would allow suppliers to voluntarily commit to reducing peak milk supplies by a minimum of 10% based on their 2020 supply volumes for a three year term and achieve a payment of 10 cpl for the peak volumes not supplied;
  • A new category for suppliers under 400,000 litres to allow such farm families to grow their operation at a rate of 10% each year for the duration of this policy, if desired;
  • An adjustment upwards of the April supply profile from 11.3% to 11.7% to allow for more flexibility for producers adjusting their milk supply curve.
  • Sean Molloy, Chief Agribusiness Growth Officer at Glanbia Ireland, explained the background to the Voluntary Reduction scheme.
  • “A number of suppliers have said that they would be willing to commit to scaling back their supply volume at peak. This will free up capacity for other suppliers, which can be allocated via a Reserve Pool”.
  • Under the Peak Supply Management Policy announced recently:
  • Farms with an annual milk supply of less than 400,000 litres may now grow Peak volumes by 10% over their base;
  • Farms with annual milk supply of between 400,000 and 550,000 litres in the base period may grow their volumes over the Peak Supply Months by 5% per year over their base;
  • Farms with annual milk supply of over 550,000 litres may grow their volumes over the Peak Supply Months by 2.5% per year over their base;
  • Growth for recent entrants (less than 3 years) will be facilitated up to the 550,000 litres threshold, after which point they align to a compound growth rate of 2.5% on peak months (April – Jun).

It is planned to issue letters with peak allocations to suppliers next week. Glanbia Ireland will continue to engage with individual suppliers to address their concerns surrounding the new policy.