Glanbia says Covid-19 restriction has 'decimated food service demand'

Company cuts price paid to farmers for milk

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Glanbia says Covid-19 restriction has ‘decimated foodservice demand’

Glanbia, which has a presence in Co Kildare in Ballitore, Monasterevin and Rathcoffey, has announced a price reduction due to the impact of the coronavirus Covid-19 which it says has led to demand being decimated and severely challenged the supply chain.

The company said it will pay its member milk suppliers 29.42 cent per litre (cpl) (including VAT) for March creamery milk supplies at 3.6% butterfat and 3.3% protein.

Glanbia Ireland (GI) says it will pay a base milk price for March of 29 cpl (including VAT) for creamery milk at 3.6% fat and 3.3% protein. This is a reduction of 2 cpl from the February base price.

Farmer members will also receive a 0.42 cpl (including VAT) payment from Glanbia Co-op on all milk supplied this month as their ‘Share of GI Profit’.

It says the Glanbia Ireland base price and Glanbia Co-op Share of GI Profit payment will be adjusted to reflect the actual constituents of milk delivered by suppliers.

The company says this 'regrettable' milk price reduction is required due to the negative impact of the Coronavirus (Covid-19) pandemic on dairy markets.

Restrictions brought in to help contain Covid-19 have decimated foodservice demand in multiple countries and severely challenged the dairy supply chain.

While some dairy market sectors including domestic retail remain stable, returns for the overall basket of dairy products is adversely affected.

Glanbia says customers directly or indirectly serving the leisure and foodservice sectors have cut order volumes until they have visibility on the re-opening of their markets.

Glanbia Chairman Martin Keane said: “The Coronavirus outbreak has caused significant challenges for all our communities and our businesses. We regret that a farm gate milk price reduction is required, but it is essential given the sharp drop in average returns from the market for our basket of products.

“The restrictions imposed during the global pandemic have particularly impacted on foodservice demand worldwide and are expected to continue to affect dairy supply chains in the weeks ahead. The Board will continue to monitor the situation on an ongoing basis but significant Government and EU action will be required to bring stability to dairy markets and to protect our milk suppliers.

“As a business we are continuing to take all appropriate measures to deal with the challenge. We are deeply appreciative of the great commitment of our farmer suppliers, our team of hauliers and our dedicated workforce who are all ensuring that the national food chain is operational at this time,” he said.

Top-up payment for Fixed Milk Price schemes

Glanbia’s March milk payment will include a retrospective top-up of over €3.5 million that will be paid to participants in Phases 8 and 11 of the Glanbia Fixed Milk Price schemes. Over 2,000 farmer suppliers will receive an average payment of €1,500.

The top-ups include the final adjustments for 2019 farm input cost movements, general consumer price inflation and the market adjuster mechanism.

Mr Keane commented: “The recent turbulence in global dairy markets highlights the importance of tools such as Fixed Milk Price Schemes, with a significant proportion of the Glanbia milk pool protected from the extremes of milk price volatility through six active schemes.

Coronavirus impact

The company says Glanbia Ireland’s Business Continuity Planning (BCP) process is continuing to deal with the challenges arising from the current outbreak of Coronavirus (Covid-19). It is coinciding with the period when milk production is approaching its seasonal peak.

It says all Glanbia Ireland facilities continue to operate to their planned capacity levels for this time of year. Glanbia has committed to keeping milk suppliers informed in the event of any challenges to milk processing over the coming weeks, when all plants in the country are required to operate at full capacity.

“A significant level of work has been carried out in our facilities to ensure that all our plants are in the best possible position to handle any challenges and to minimise the chances of any impact on milk collection,” concluded Mr Keane said.