Glanbia Co-op & partners extend ‘MilkFlex Fund’ to end of 2017
Glanbia Co-operative Society (‘the Co-op’), the Ireland Strategic Investment Fund, Rabobank and Finance Ireland have announced the extension of the ‘Glanbia MilkFlex Fund’ (‘the Fund’) until the end of December 2017.
- Innovative product provides loans for growth to Glanbia milk suppliers with in-built milk price volatility protection
- Over €43m of applications to MilkFlex Loan Fund since launch in 2016
The Fund offers flexible, competitively priced loans to Glanbia milk suppliers with loan repayments which vary according to seasonality and movements in milk price.
The purpose of the Glanbia MilkFlex Fund is to provide Glanbia milk suppliers in the Republic of Ireland with an innovative funding product to support investment in on-farm productive assets (including livestock, milking platform infrastructure and land improvement).
Since its arrival on the market in May 2016, the Fund has received loan applications totalling €43 million, and has provided loans with an average value of €100,000.
A key feature of this innovative loan product is that it has inbuilt ‘flex triggers’ that adjust the repayment terms in line with movements in Glanbia Ingredients Ireland’s (GII) manufacturing milk price and seasonality, thereby providing farmers with cash flow relief when most needed.
Rabobank, the Ireland Strategic Investment Fund, Finance Ireland and Glanbia Co-Operative Society are co-investors in the Fund while Finance Ireland originate the loans and manage all aspects of the Fund.
The interest rate charged on the loans is a variable rate of 3.75% above the monthly Euribor cost of funds (with a Euribor floor of zero).
Henry Corbally, Glanbia Co-op chairman said: “In November, almost 90% of our GII milk suppliers completed a very detailed milk planning Census, with a large number expressing interest in applying for a MilkFlex Loan to support investments planned for 2017. We are very appreciative of the support of our partners - the Ireland Strategic Investment Fund, Rabobank and Finance Ireland - in agreeing to extend the Glanbia MilkFlex Fund until the end of 2017.”
The MilkFlex loans have a standard term of eight years, but may be extended by up to a maximum of a further two years when volatility triggers are enacted. The key features of the proposed loan product are:
- A six month reduction by 50% in loan repayments, when the GII manufacturing milk price falls below 28 cent per litre (including VAT) for three consecutive months;
- A moratorium on all loan repayments for six months, when the GII manufacturing milk price falls to or below 26 cent per litre for three consecutive months or when the outbreak of a notifiable disease reduces milk output materially on the previous year and;
- An increase in loan repayments, when the GII manufacturing price goes above 34 cent per litre for three consecutive months. From a milk supplier perspective, other key features of the Glanbia MilkFlex Fund include:
- Loan repayments are automatically deducted from the supplier’s milk receipts by GII. The profile of repayments will reflect the seasonal milk supply curve, with no loan repayments – interest or principal – during the low milk production months from November to February inclusive;
- Loans are available for amounts of between €25,000 and €300,000;
- Loans are unsecured however repayments are made as a priority deduction from milk payments;
- Loans can be drawn down for investment in on-farm productive assets to support an existing or growing dairy farm enterprise (including livestock, milking platform infrastructure and land improvement);
- Lending decisions are based on the merit of a farmer’s cashflow as opposed to the asset value of their farm, subject to meeting eligibility and underwriting criteria;
- An amount is set aside within the Fund for new entrants to dairy farming;
- MilkFlex has the added flexibility of refinancing loans as well as funding working capital;
- In order to qualify for access to the Glanbia MilkFlex Fund, a supplier must maintain a valid Milk Supply Agreement (MSA) with GII for the term of the loan.
Finance Ireland will continue to manage the origination of loans from the Fund and will require a clear business case in order to justify the lending decision. Each applicant must meet eligibility and underwriting criteria. None of the other investors will be involved in lending decisions, or in the provision of advice or otherwise to individual suppliers in relation to participating in the Fund.
Glanbia suppliers interested in applying for a MilkFlex Loan should contact Finance Ireland on 01-6470255.
Glanbia Co-operative Society Limited is the largest individual shareholder in Glanbia plc, with approximately 36.5% of the issued share capital of the Company. The Society is Ireland’s largest and most valuable Co-operative, with over 16,000 members and a current value of €1.9 billion.
Glanbia Ingredients Ireland DAC is a 60:40 joint venture between Glanbia Co-operative Society Limited and Glanbia plc, the publicly quoted global nutrition company. It is the number one dairy processor in Ireland, processing 2 billion litres of milk and exporting dairy products to over 60 countries.
The Ireland Strategic Investment Fund (€8 billion) has a statutory mandate to invest on a commercial basis in a manner designed to support economic activity and employment in the State. It is controlled and managed by the National Treasury Management Agency (NTMA).
Rabobank is the world’s leading global food and agri-bank. It is a cooperative bank based in the Netherlands, with 8.8 million clients in 40 countries and €662 billion in total assets. Rabobank’s offices in Ireland are in George’s Dock House, IFSC, Dublin 1.
Finance Ireland is Ireland’s largest non-bank lender and provides finance to businesses across the economy. As well as managing Glanbia’s Milk Flex scheme, the company also provides finance to the SME, Agri, Motor and Commercial Real Estate sectors. It has a team of dedicated agri-finance professionals.
First Published 7 March 2017