Glanbia Co-operative Society and partners announce final call for applications to the Glanbia MilkFlex Fund

Glanbia Co-operative Society (‘the Co-op’), the Ireland Strategic Investment Fund, Rabobank and Finance Ireland have extended the closing date for applications to the ‘Glanbia MilkFlex Fund’ (‘the Fund’) to 28th February 2018.

• Final closing date for applications 28th February 2018
• Loan applications with a value of €95m received to date

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 valued in excess of €95 million. The average value of MilkFlex loans drawn from the Fund is approximately €100,000 to date.

Commenting on the final call for applications to the Fund, Henry Corbally, Glanbia Co-op chairman said: “We are now entering the final weeks for our milk suppliers to apply to the Glanbia Milkflex Fund. We are very pleased with the feedback that we have received to date from our supplier base and we would like to highlight the closing date for applications and encourage any suppliers who may be interested in applying to the Fund to get in touch with Finance Ireland before the 28th February.”

The Glanbia MilkFlex Fund received a major Award at the 2017 European Awards for Co-operative Innovation held in Brussels in November last year. The COGECA Business Model Innovation Award was presented to the MilkFlex Fund for providing Glanbia milk suppliers with an innovative funding model that helps protect farm incomes from the impact of dairy market volatility.

Further information regarding the MilkFlex Fund can be obtained by contacting the Finance Ireland Agri Team (Tel: 01 6470255 or email [email protected]). Upon receipt of an enquiry, Finance Ireland will contact the farmer to organise a farm visit to assess their requirements and evaluate all relevant documentation.

Fund details

A key feature of the Glanbia Milkflex Fund is that it has inbuilt ‘flex triggers’ that adjust the repayment terms in line with movements in Glanbia Ireland’s (GI) manufacturing milk price and seasonality, thereby providing farmers with cash flow relief when most needed.

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 loan product are:

• A six month reduction by 50% in loan repayments, when the GI 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 GI 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 GI 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 GI. 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 GI for the term of the loan.

Finance Ireland manage the origination of loans from the Fund and 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.

Fund partners

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 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 2.4 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 €623 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 country. 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 12 January 2018