Glan­bia fac­ing a hard sell on sup­plier loy­alty scheme

‘Mixed to bad’ re­ac­tion from farm­ers to 31c/l fixed milk price of­fer

Irish Independent - Farming - - NEWS -

GLAN­BIA is fac­ing an up­hill bat­tle to sell its new loy­alty scheme to the com­pany’s 4,600 milk sup­pli­ers.

Re­ac­tion from Glan­bia’s dairy farm­ers to the scheme has been de­scribed as “mixed to bad”, with farm­ers ex­press­ing se­ri­ous mis­giv­ings that the fixed milk price el­e­ment is tied to feed pur­chases from the group.

Un­der the scheme Glan­bia an­nounced a five-year fixed milk price of 31c/l in­clud­ing VAT and a €30 per tonne loy­alty bonus on con­cen­trate dairy feeds from GAIN An­i­mal Nu­tri­tion prod­ucts.

Con­tro­ver­sially, Glan­bia has stated that sup­pli­ers who com­mit to pur­chas­ing their feed from the pro­ces­sor will be given pri­or­ity ac­cess to the fixed milk price strand of the pack­age.

This move has pro­voked heavy crit­i­cism from the farm or­gan­i­sa­tions.

A num­ber of Glan­bia sup­pli­ers con­tacted said they wouldn’t ap­ply for the scheme.

The farm­ers pointed out their feed sup­pli­ers were gen­er­ally €15-20/t cheaper than the best prices avail­able from Glan­bia.

Man­age­ment at Glan­bia are due to meet with an ICMSA del­e­ga­tion to­mor­row to dis­cuss the loy­alty pack­age.

The dairy pro­ces­sor met with the IFA dairy com­mit­tee last week, with the farm or­gan­i­sa­tion reit­er­at­ing their mis­giv­ing re­gard­ing the scheme.

While ac­cept­ing that the fiveyear fixed milk price con­tract was an­other im­por­tant ef­fort to help farm­ers man­age their milk price risk and the firm have been in­no­va­tive, the IFA dairy chair­man Sean O’Leary said giv­ing pref­er­en­tial ac­cess based on links with feed pur­chases from Glan­bia was ob­jec­tion­able and po­ten­tially anti-com­pet­i­tive.

Glan­bia has ar­gued that the loy­alty scheme of­fered the pro­ces­sor’s cus­tomers un­ri­valled trace­abil­ity.

“The es­tab­lish­ment of this co­hort of farm­ers al­lows Glan­bia Ire­land pro­mote the ‘closed loop’ pro­cure­ment con­cept in terms of prod­uct claims and mar­ket­ing ini­tia­tives,” Glan­bia’s Sean Mol­loy claimed.

How­ever, the IFA re­jected this as­ser­tion. Mr O’Leary pointed out that the vast bulk of the coun­try’s com­pound feed sup­pli­ers were in­de­pen­dently ac­cred­ited and qual­i­fied for ex­ist­ing qual­ity as­sur­ance schemes.

The ICMSA’s John Comer said farm­ers had “gen­uinely se­ri­ous reser­va­tions” which needed to be ad­dressed. “Farm­ers are con­cerned they could be tied into an un­com­pet­i­tive feed price,” he said. “We think that pri­or­ity sta­tus for the feed scheme should be dropped.”

With ap­pli­ca­tion forms due to is­sue in the com­ing weeks, a Glan­bia spokesman said there has been a “high level of in­ter­est” with the feed el­e­ment at­tract­ing the most ques­tions.

“The scheme re­wards loyal cus­tomers who com­mit to sup­ply their milk and pur­chase their dairy feed from Glan­bia Ire­land. As ma­jor­ity own­ers of the busi­ness, farm­ers will share in the ben­e­fits of in­creased loy­alty to the or­gan­i­sa­tion.”

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