Update from Jim Bergin

2018 has really kicked off with challenging conditions. A prolonged Winter, in some places since early Autumn, has increased workload and cost on farms. Add to that, historically severe snow and icy conditions that brought the country to a halt. In the midst of the calving season with a deficit of good help on farms both determination and resilience have been tested to the limit.

The heroes of the hour are those farm employees, hauliers and contractors who worked in the most adverse conditions to clear roadways and to get to farms for milk collection or feed delivery. Thankfully we have come through it without loss of life. A very focused group of senior managers executed our business continuity plan for the full supply chain with great success under the circumstances.

The Board moved swiftly to acknowledge the hardship on farms and to provide assistance of 20 cpl for lost milk. By doing this our high quality milk standards were maintained for our customers and consumers and farmers were given an early boost as they worked to restore normality on their farms. Glanbia branches were also opened as soon as possible to make feed and especially water fittings available. The glimmer of hope comes from the longer evenings and increasing daylight.

Away from the weather, markets are also proving as difficult as predicted. At our information meetings in early January we indicated that markets had weakened considerably. Unfortunately this situation has not improved and trading today is being conducted in a range equivalent to a farm gate price of 27 to 29 cpl across the globe. The US and Oceania processors are operating at this level and the Europeans are moving there steadily.

We are pleased that Glanbia Ireland has more milk in Fixed Price Schemes than ever before and you will have received application forms for Scheme 11 last week. Based on projected trading for the coming months, the Board has reduced the base milk price to 32 cpl for the month of February while paying a 1 cpl bonus in view of the severe weather event. Ths brings the net February price to 33 cpl.

This is only a first step in stemming the losses from trading. Unfortunately further reductions are inevitable until we reach an equilibrium with market returns. We believe we are trading well in the business and each year we increase the volumes to be sold based on your growth. The management and staff will do everything in their power to optimize market value while we wait for the tide to turn positive again. We are hopeful that this might happen in the fourth quarter of 2018.

This is an incredibly busy time on farms and levels of tiredness increase until calving finishes, the weather improves and the pressure reduces somewhat. During this period in particular please keep safety front and centre in all that you do.

First Published 20 March 2018