Hard-pressed dairy farmers demand fairer contracts with milk buyers
PUBLISHED: 10:59 16 September 2020 | UPDATED: 10:59 16 September 2020
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Dairy farmers are calling for fairer milk contracts in order to sustain the future of their industry and foster a more even relationship with major buyers and processors.
The National Farmers’ Union (NFU) has submitted its response to a government consultation on the future of dairy contracts, launched after a review by the Groceries Code Adjudicator found an uneven distribution of power within the dairy supply chain, leaving farmers to bear the brunt of low milk prices.
The NFU has outlined proposed changes to the system of “buyer’s discretion” which it says is “archaic and used very rarely in other countries or sectors of agriculture”, adding that farmers should have “transparency and influence over the mechanism which sets their price rather than it being dictated to them”.
It also wants farmers to be given the option to supply more than one milk buyer, and highlights the need for effective regulation, backed up with strong powers, to ensure compliance.
NFU dairy board chairman Michael Oakes said the consultation represents the sector’s most important conversation in a quarter of a century, and a vital opportunity to improve the structure of the dairy industry “so it is more sustainable, progressive and improves the way farmers and processors work together”.
He said: “For far too long, dairy farmers have borne the brunt of contracts that are weighted heavily in favour of the milk buyer who can change contract terms and pricing mechanisms, and even introduce retrospective penalties and price cuts without negotiation.
“We want to see freely negotiated and flexible contracts which are tailored to the needs of both buyers and dairy farmers. Fairer contracts should increase transparency and trust, that benefits both sides, and mean that any changes need to be mutually agreed.”
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Mr Oakes added that the NFU recognises the good practice and collaboration which already occurs in the British dairy sector.
“We have spoken to a number of co-operative businesses to understand their concerns and ensure that regulation does not create any unintended consequences,” he said.
“There are many private and PLC dairy companies who operate well in partnership with their dairy farmers. We feel very strongly that regulation should only help to improve the situation of those who share our principles, not adversely impact them.
“Post-Brexit, the UK dairy market needs to be commercially focused, innovative and resilient in order to tackle the challenges and opportunities that leaving the EU will bring. We believe this vital consultation can help the industry find a successful way forward.”
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