Ireland’s largest exporter of dairy products, the IDB is owned by 10 Irish dairy co-operatives, including Glanbia, Carbery Group, Adams Foods and Dairygold, and reported a €1.9bn turnover in 2010.
Where it replaces a €250m syndicated banking facility, the new package – funded by a consortium of leading banks – comprises two parts, the first of which is a €160m loan facility.
In addition to funding IDB’s existing requirements, the company said this would also allow it to develop its international growth strategy.
Working capital requirements
Asked where priorities lay in this respect, a spokesman for the IDB told DairyReporter.com that the firm was targeting export markets – in terms of both finished products and dairy ingredients – including Russia, North Africa, the Middle East, China and Southeast Asia.
The second part of the IDB’s new banking facility is a novel ‘Reverse Invoice Discounting Facility’ (RID), designed to fund the working capital requirements of its members.
This will allow IDB members to discount sales invoices to the IDB and receive funds for goods upfront, with the IDB providing security of payment to the banks.
“It gives more working capital back to our members to fund their working capital requirements, for an industry that’s set to grow. The advantage of it is that it’s a scaleable facility as well,” the spokesman said.
Industry poised for lift off
Growth expectations and the development of RID were linked to opportunities for IDB following the scrapping of EU milk quotas from 2015, he added, referencing the Irish government-backed Food Harvest 2020 report.
“So it’s about preparing and putting the plans and structures in place to develop and grow accordingly,” he said.
In Food Harvest 2020 (cover pictured) launched in July 2010, the authors wrote: “The committee believes that a target of a 50 per cent increase in [Irish] milk production by 2020 (using the average of the years 2007 to 2009 as a baseline) would be realistic and achievable, and that this will set the foundation for further expansion in subsequent years.”
They added: “This 2.75bn litre increase would enhance the primary output value of the sector by about €700m with further downstream benefits in the form of increased dairy product values, export earnings and employment.”