Grennans top Glanbia in fixed-milk price battle
Feed merchant reports farmer interest in its ‘loyalty scheme’
FEED merchants Grennans has stated there is interest in its fixed-milk price scheme as it counteracted the move by Glanbia to link feed purchases to a €30/t ‘loyalty scheme’.
The move by milk processor Glanbia has drawn the ire of feed merchants around the country.
Grennans has responded by topping Glanbia’s offer of 31c/l. It is offering a five-year fixed 31.5c/l base milk price — including VAT, on 3.3pc protein and 3.6pc butterfat —to its customers who are Glanbia suppliers.
John Grennan claimed Glanbia is using co-op shareholder funds to create a “war chest” for Glanbia Ireland to get cheaper milk and try undercut feed merchants on the value they are offering.
“Without the top up from the shareholder funds, their price is very weak on milk,” he said.
The milk will still be supplied to Glanbia, but Grennans is pledging that if the average base price paid for milk by Glanbia over the five-year term dips below the fixed price, it will pay the difference for the volume fixed.
However, farmers will be required to pay the feed merchant the difference if it surpassed the fixed price.
Grennans said there will be “limited quantities” and it will apply to a maximum of 20pc of a customers annual milk output.
Glanbia stated it would not be providing the figures on the exact number of farmers signing up to the fixed-milk and feed -price scheme.
However, the milk processor stated that 25,000t of feed was available through the scheme and it was oversubscribed.
Applications submitted by the October 18 deadline will now be analysed and distributed.
Glanbia declined to comment on the Grennans’ offer.
It has stated that the €30/t feed ‘reward’ is coming from Glanbia Ireland resources.
“Glanbia Ireland is very grateful to its shareholders and customers for their loyalty and support for making the business a success since its formation in July. Glanbia Ireland is majority owned by Glanbia farmers through Glanbia Coop,” a Glanbia spokesman said.
Jimmy Brett from the Brett Group confirmed it would not be following Grennans’ lead.
“We’ve seen the offer by Grennans —it’s a very brave offer from a private merchant, and the company needs to be commended for it. It puts some perspective on what a long- term milk price could be,” Mr Brett said.
He would not be drawn on Glanbia’s scheme however.
“We don’t believe in marketing gimmicks, nor do we believe in giving farmers back their own money packaged as discounts,” Mr Brett stated.
Liffey Mills Pat Ryan said: “Glanbia are removing competition and choice for the farmer. A healthy marketplace is where everyone is competing on a level playing pitch.”
Glanbia had run scheme information meetings nationally as it tried to convince farmers to sign up.
However, many raised concerns about agreeing to purchase feed at an unknown price over five years.
Glanbia moved to allow suppliers opt out of the feed element after two years without penalty.