The Fund offers flexible, competitively priced loans to Glanbia milk suppliers with loan repayments which vary according to seasonality and movements in milk price.
Glanbia has ince its arrival on the market in May 2016, the Fund has received loan applications totalling €43 million, and has provided loans with an average value of €100,000.
Rabobank, the Ireland Strategic Investment Fund, Finance Ireland and Glanbia Co-Operative Society are co-investors in the Fund while Finance Ireland originate the loans and manage all aspects of the Fund.
The interest rate charged on the loans is a variable rate of 3.75% above the monthly Euribor cost of funds (with a Euribor floor of zero).
Henry Corbally, Glanbia Co-op chairman said: “In November, almost 90% of our GII milk suppliers completed a very detailed milk planning Census, with a large number expressing interest in applying for a MilkFlex Loan to support investments planned for 2017.
“We are very appreciative of the support of our partners – the Ireland Strategic Investment Fund, Rabobank and Finance Ireland – in agreeing to extend the Glanbia MilkFlex Fund until the end of 2017.”
The MilkFlex loans have a standard term of eight years, but may be extended by up to a maximum of a further two years when volatility triggers are enacted. The key features of the proposed loan product are:
A six month reduction by 50% in loan repayments, when the GII manufacturing milk price falls below 28 cent per litre (including VAT) for three consecutive months;
A moratorium on all loan repayments for six months, when the GII manufacturing milk price falls to or 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 and;
An increase in loan repayments, when the GII manufacturing price goes above 34 cent per litre for three consecutive months. From a milk supplier perspective, other key features of the Glanbia MilkFlex Fund include:
Loan repayments are 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 are available for amounts of between €25,000 and €300,000;
Loans are unsecured however repayments are made 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 are based on the merit of a farmer’s cashflow as opposed to the asset value of their farm, subject to meeting eligibility and underwriting criteria;
An amount is set aside within the Fund for new entrants to dairy farming;
MilkFlex has the added flexibility of refinancing loans as well as funding working capital;
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.