Call for applications to the Glanbia MilkFlex Fund

Visit the Glanbia Ireland stand at the National Ploughing Championships to meet the Finance Ireland team and learn more about MilkFlex Loans.

Glanbia Co-operative Society (‘the Co-op’), the Ireland Strategic Investment Fund, Rabobank and Finance Ireland have launched a call for applications to the ‘Glanbia MilkFlex Fund’ (‘the Fund’).

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).

Those interested in learning more about the MilkFlex Loan product can meet with members of the Finance Ireland team on the Glanbia Ireland stand at the National Ploughing Championships in Screggan, Tullamore, Co Offaly from 19th -21st September.

Since its arrival on the market in May 2016, the Fund has received loan applications in excess of €75 million. The average value of MilkFlex loans drawn from the Fund is €100,000 to date. 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 Ireland’s (GI) 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: “The Glanbia MilkFlex Fund has proven very popular among our milk suppliers to date. We are encouraging any suppliers who may yet be interested in applying to the Fund to come and visit the Glanbia Ireland stand at next week’s National Ploughing Championships to learn more about the application process and so that the dedicated Finance Ireland team can answer any questions they may have.”

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.

Glanbia suppliers interested in applying for a MilkFlex Loan should contact Finance Ireland on 01-6470255 or visit the Glanbia Ireland stand – Block 1, Row 11, Stand 255 - at the National Ploughing Championships in Screggan, Tullamore, Co. Offaly from 19-21 September.

First Published 15 September 2017