Merchant millers may need to be braver and more

SPARE a thought for the lads in Glanbia’s PR department. If they aren’t getting it in the neck from farmers about the latest scheme to lock in loyalty through feed purchases, they’re fighting a backlash from the country’s usually mild-mannered meal millers.

In the case of the latter, you can understand why the merchants of the Irish agri-business world are up in arms. They thought they were made up when ballooning post-quota milk production resulted in rocketing feed demand.

Despite all the guff about producing milk from grass, I don’t know any farmer that can do it without having a few tonnes of meal in reserve.

When you factor in an extra 400,000 cows over the last couple of years there’s suddenly a lot of extra mouths to feed.

And it’s not just the additional cows that need feeding.

All those boney Friesian bull calves are chomping their way through mountains of feed as farmers try to turn them into respectable burgers.

No wonder the country’s private feed millers have sunk at least €20m into shiny new facilities over the last few years. Quinns of Baltinglass is the latest to announce an upgrade to bring another 50,000 tonnes of ration to the market.

This comes hot on the heels of Grennans investing serious loot into a plant capable of churning out 180,000t, Liffey Mills sticking in another 50,000t line and Bretts giving its storage facilities a serious revamp. Those figures might also explain why the merchants are so upset with Glanbia’s most recent fixed milk price scheme.

It had the added twist of offering dairy farmers a €30/t discount on feed bought from their mills, but only if the farmer committed to buying all their feed from Glanbia for the next five years.

Following a hue and cry from its supplier base, Glanbia backed down and included an opt-out after two years.

Every farmer I talked to roundly dismissed the meal offer as an attempt by the co-op to counteract the improving competition, and possibly the growth of increasingly professional farmer buyer groups.

Despite this, Glanbia claims that its feed allocation of 25,000t for the scheme was oversubscribed, and is now closed to further offers. also unappealing for millers.

They believe that Glanbia is simply using a €70m war chest of cash left over from the spin-out of co-op shares to cross-subsidise both the price the co-op is paying farmers for their grain and milk, and the price that those same farmers are paying for their meal inputs.

They point to the €14/t ‘top-up’ that Glanbia shareholders get on their grain deliveries.

This is up from €5/t two years ago. Dairy farmers also got a co-op ‘sponsored’ top-up of 1c per litre during the worst of the price collapse last year.

There are other feed rebates available to drystock farming shareholders which, according to the processor, is all coming out of Glanbia