Creative in battle with Glanbia

Ireland ‘resources’.

Glanbia claimed that the €30/t rebate was simply what it is able to offer its farmers on the back of marketing and production efficiencies achieved in recent years.

If it was a one-trick feedmerchant-pony that wouldn’t stack up since industry norms for costs in either marketing or production are not much more than €20/t.

But Glanbia has many more strings to its bow. So a €30/t is small beer in the greater scheme of things.

A spokesman for the processor was adamant that none of the money left over from the share spin-out is being used here.

But maybe that’s beside the point. Even if only some of the rebates that are being used to subsidise the price that Glanbia is paying or charging farmers, it raises the age-old problem of why ‘dry’ shareholders’ funds should be used to prop up active shareholders’ prices. Or even worse, why shareholders’ funds are being used to undercut the competition.

This would be my real concern if I was a co-op shareholder. It’s all too easy for management at Glanbia to be able to dip into these spin-out leftovers to cover up poor trading decisions or to simply buy market share.

Nobody is any the wiser and management looks good because ‘the company is going from strength to strength’.

For future spin-outs — which will surely come — co-op shareholders should be much more cautious about agreeing to leave millions of their equity in the hands of company bosses whose remit is to maximise the bottom line.

As for the merchant millers that dot the regions? If they are waiting for the money to dry up they have a long wait in front of them. Glanbia is a wealthy entity and that wealth will be dribbled out to shareholders over the coming decades just as Kerry has done over the last 30 years.

Instead they will just have to accept that co-ops will always use their strength in numbers and wealth to limit competition and keep their members happy. It’s not personal, it’s just business. Time for the merchant princes to get brave or get out.