Strong Finish to a Watershed Year

As we welcome the start of a new year, we can look back on 2017 as a year of strong productivity, low feed prices and strong milk prices. The Irish dairy phenomenon rolls on in Glanbia Ireland with a 9% increase in milk supplies in 2017.

Milk price increased steadily and has been at a high level for the latter months with high solids. The Autumn period has proved to be a revelation for farmers with very strong payments since the quota regime was abolished.

The Glanbia Ireland team performed very well during the year, collecting and processing record volumes of milk. Our new €35 million cheese plant in Wexford performed very well and produced more than 30,000 tonnes of quality cheese. Our latest investment in Whey Protein Isolate expansion is progressing well.

2017 was also a historic year for Glanbia Co-op when it received 93% backing to acquire 60% of Glanbia Agribusiness and Glanbia Consumer Foods, two businesses with revenues of over €600 million. The creation of Glanbia Ireland by combining these two businesses with Glanbia Ingredients Ireland is quite historic as it brings the three farmer-facing businesses back into the Co-op fold after 29 years. As we work through the opportunities for the future we see an increasing logic for this transaction. Having the full supply chain from farm to shop-shelf in one business has many advantages not least in sustainability and traceability.

So far the highest profile achievement of the business is the creation of the five-year fixed milk price scheme linked to a feed offer of €30 Loyalty Reward per tonne for dairy feed. This offer has proven very popular with Glanbia milk suppliers and will provide stability for them in what continues to be a very volatile market. This scheme underlines the fact that if suppliers support their own Co-op it makes the business stronger and puts it in a position to reward shareholder loyalty.

Glanbia continues to lead in the area of price volatility management and it was a proud moment for the organisation when our Chairman Henry Corbally, Vice Chairman Martin Keane and Strategy Director, Sean Molloy were presented with the Copa COGECA Co-op award for Innovation in the European Parliament. The award, of course, was for the MilkFlex Loan Fund which has made flexible funding available to milk suppliers at a lower interest rate.

Looking to the future it appears that 2018 will be tougher than 2017. Price volatility is a regular phenomenon unfortunately and we will have to grit our teeth and work our way through it. Many farmers have adapted their plans for the good years and the weaker years. For our part we will continue to provide additional fixed milk price schemes.

We will be out to meet you all this month for a round of Information Meetings. I look forward to meeting you then for a good discussion on Glanbia Ireland and the future.

Jim Bergin

CEO — Glanbia Ireland DAC

First Published 2 January 2018