The board of Glanbia cannot maintain a “business as usual” approach in the face of the ongoing public health emergency, according to two of Waterford IFA’s principal figures.
In a letter published in this week’s Irish Farmers Journal, Waterford IFA Chair Kevin Kiersey and Waterford IFA Dairy Chair Mark Connors said that dairy farmers deserve better in the face of the Covid-19 pandemic.
“While Irish people in all sectors of society are doing their bit in this current war-like situation, Glanbia Ireland continues its business as usual,” they write.
“Kerry Group and many international businesses are revising their forecasts for 2020. But Glanbia Ireland is defiant. Let’s hope this insistence by Glanbia is not purely to support an already troubled set of plc accounts.”
In a statement issued on Tuesday last, May 12, Glanbia announced it would pay it member milk supplier 28.42 cent per litre (cpl), a reduction of one cent per litre from the March base price. The reduction, according to Glanbia was attributed “to the negative impact of the Coronavirus (Covid-19) pandemic on dairy market returns”.
Said Glanbia Chairman Martin Keane: “Dairy markets continue to be impacted by Covid-19 and the current returns from our basket of products unfortunately require an adjustment in milk price. The pace of recovery in consumer activity, as well as global milk supply trends, will be key factors driving dairy market movements in the months ahead. The Board will continue to monitor the situation on an on-going basis.”
Referring to a May 14 ‘IFJ’ report on how dairy farmers are paid, Mr Kiersey and Mr Connors write: “it’s incredible that Glanbia records around €60m profit on 2.4bn litres, which is about 2c/litre, and Dairygold records €9m on 1.3bn litres, which is approximately 0.7c/litre. For those of us that live in the real world, the laws of economic apply to us all. This 3.2% profit margin can only have a negative impact on the price. Therefore, we are calling on the board of Glanbia to support its fellow farmers in these difficult and testing times by adjusting targets to reflect the reality of the income situation at farm level rather than the easy price-cutting option.”
In a May 7 statement, five days prior to the April price announcement, a Glanbia spokesperson said that “focusing on a headline price in a particular month” did not reveal the fuller picture, adding that annual recordings on milk price merited primacy.
“We remain committed to achieving a very competitive milk price performance in 2019 on that measure,” the spokesperson said.
“Glanbia Ireland is investing to create long-term value for all shareholders – a profit level of 3.2% is required to achieve this objective for everyone’s benefit. Furthermore, a substantial profit generated by Glanbia Ireland flows back to active farmers via the co-op.”
Mr Connors and Mr Keane see things differently. “In the 2009 milk price crisis, Glanbia dairy farmers were left completely exposed by the plc structure. In the intervening years, farmers shareholders voted to transform the organisation to its present structure in the belief that the business could and would look after them if such a crisis occurred again. But we were fooled.”
Meanwhile, Glanbia’s milk processing facilities continue to operate at anticipated capacity levels according to Martin Keane.
“As a business we are continuing to take all appropriate measures to deal with the Coronavirus challenge,” he said.
“We are deeply appreciative of the great commitment of our farmer suppliers, our team of hauliers and our dedicated workforce who are all ensuring that record peak milk volumes are currently being handled very well by all links in the supply chain.”