New Glanbia Ireland Liquid Milk Supply Agreement (LMSA)

Glanbia Ireland (GI), Ireland’s leading dairy processor, is this week writing to liquid milk suppliers with the details of a new five-year Liquid Milk Supply Agreement (LMSA).

The LMSA was developed following consultation with Fresh Milk Producers (FMP).

• New five year agreement for liquid milk producers
• Option for committed liquid suppliers to expand their volumes
• Opportunity for suppliers to exit liquid milk and convert to spring milk

Sean Molloy, Chief Agribusiness Growth Officer with Glanbia Ireland said: “Glanbia Ireland (GI) has a long and proud commitment to the fresh milk market in Ireland. Today, Avonmore is the clear market leader as Ireland’s number one dairy brand. Whilst the liquid milk market in Ireland faces signification challenges particularly with the growth in private label sales, Glanbia Ireland is committed to leveraging the considerable strength of our brand and our suppliers’ commitment to supply the highest quality milk.”

“To maintain our brands’ highest quality standards, we require milk suppliers fully committed to all year round milk production, with a dedicated proportion of autumn calving cows. We also appreciate that some farms would benefit from the switch to a complete spring calving system. Other farms require higher winter milk volumes in order to justify their commitment to year round milk production. The new LMSA has options to suit both categories.”

Glanbia Ireland said that the LMPS provides milk suppliers with a five year contract that gives certainty of pricing. For those who want to grow, the LMSA gives a guarantee of growth volumes of 23%. There is also an opportunity for suppliers to exit liquid milk and transition to spring milk.

• Suppliers can opt to either remain in or exit liquid milk production;
• A Restructuring model for those who wish to exit liquid milk production will make a once off exit payment and a transition payment to assist the supplier to convert to a creamery production system;
• For suppliers that want to remain in liquid milk production, there is an opportunity to grow volumes;
• To help finance the exit package, there is a Restructuring Levy for 3 year payable by all suppliers that remain in liquid production;
• GI has committed to pay up to two thirds of the restructuring costs with the balance paid by those remaining in liquid milk production. Those who are expanding their liquid milk production will pay a higher contribution than those who choose to maintain their current production level.

First Published 4 December 2018