Glanbia Co-Op has partnered with Rabobank and Finance Ireland to create a €100m fund which will bring flexible, low-interest loans to farmers in the dairy sector and protect farm incomes from the impact of dairy market volatility.

With a variable interest rate pitched at 3.75% above Euribor, with a Euribor floor of zero, loans will have a built-in ‘flex trigger’ which will adjust repayment terms in line with movements in Glanbia Ingredients Ireland’s manufacturing milk price, thus providing farmers with cash flow relief when most needed.

The loans will have a standard term of eight years, but may be extended by a further two years when volatility triggers kick in. Key features are:

• Temporary reduction in repayments when the GII manufacturing milk price falls below 28 cent per litre for three consecutive months
• Moratorium on loan repayment for a period, when the price falls below 26 cent per litre for three consecutive months or when the outbreak of a notifiable disease reduces milk output materially on the previous year
• An increase in loan repayments when the price goes above 34 cent per litre for three consecutive months.

Eugene O’Callaghan, Director of the Ireland Strategic Investment Fund added: “The Glanbia MilkFlex Fund utilises our inherent flexibility and delivers an innovative funding solution that supports the ambitious growth agenda of Ireland’s agri-food sector, as set out in the Food Wise 2025 strategy. This new Fund provides a model for ISIF to participate in other such funds in the dairy industry and across the agri-food sector.”

Terms & Conditions 

From a milk supplier perspective, other key features of the Glanbia MilkFlex Fund include:

In Association with

• Loan repayments will be automatically deducted from the supplier’s milk receipts by GII. The profile of repayments will reflect the seasonal milk supply curve, with no loan repayments – interest or principal – during the low milk production months from November to February inclusive;

• Loans will be available for amounts of between €25,000 and €300,000;

• Loans will be unsecured however repayments will be made by as a priority deduction from milk payments;

• Loans can be drawn down for investment in on-farm productive assets to support an existing or growing dairy farm enterprise (including livestock, milking platform infrastructure and land improvement);

•Lending decisions will be based on the merit of a farmer’s business plan as opposed to the asset value of their farm, subject to meeting eligibility and underwriting criteria;

•There will be an amount set aside within the Fund for new entrants to dairy farming;

In order to qualify for access to the Glanbia MilkFlex Fund, a supplier must maintain a valid Milk Supply Agreement (MSA) with GII for the term of the loan. Subject to completion of the legal documentation, it is expected that the Fund will be made available to farmers from May 2016.

Finance Ireland will host a series of workshops in the GII catchment area in April to provide information to milk suppliers interested in making an application for funding from the Glanbia MilkFlex Fund.

Finance Ireland will manage the origination of loans from the Fund and will require a clear business case in order to justify the lending decision. Each applicant must meet eligibility and underwriting criteria. None of the other investors will be involved in lending decisions, or in the provision of advice or otherwise to individual suppliers in relation to participating in the Fund.