Consultation offers ‘once in a lifetime opportunity’ to create better dairy sector future
THE NFU details the long-awaited talks which could finally put an end to unfair milk contracts for UK farmers
THE NFU is urging dairy farmers to engage with the longawaited Government consultation on dairy contracts and speak up for a more effective dairy supply chain, with fairer terms for farmers.
The Government has launched the consultation after looking at the issue for two years, since a review of supply chain fairness by the Grocery Code Adjudicator found an uneven distribution of power within the dairy supply chain.
The NFU and NFU Cymru will be hosting a number of regional and national meetings, to engage with members in discussion around the contracts consultation.
Members will have the opportunity to speak with the
NFU board chair and team, as well as Defra in a number of calls, so contact your local regional office to register interest.
For most dairy farmers, their contract to sell milk is the single most important piece of paper they have for their business and shapes the relationship with their milk buyer.
Unfair milk contracts have been an area of concern for the dairy sector for many years.
A significant proportion of the calls the farming unions receive are from farmers with issues which ultimately relate back to their milk contract.
In 2018, following an industry wide review of the Groceries Code Adjudicator, it found there is an uneven distribution of power within the sector.
This led Defra and the Devolved Administrations to announce they would launch a consultation on contract regulation aimed at improving fairness in the dairy supply chain.
The four UK farming unions (NFU, NFU Cymru, NFU Scotland and Ulster Farmers’ Union) are supportive of this approach and will be providing a response to the consultation.
We have developed ideas over the past few years in consultation with our members which will be further enhanced over the consultation period.
This includes the development of five key points for contract reform for a more transparent, fair and well-functioning dairy supply chain.
This document is accessible to NFU members only.
NFU dairy board chairman Michael Oakes said: “Dairy farmers want to place themselves in a more sustainable position for the long term and dairy contracts are at the heart of this.
“We want to see flexible and innovative regulation that not only delivers fair terms for farmers but an equitable balancing of risk between farmers and buyers.
During the COVID-19 pandemic, we have seen a significant number of cases where
farmers have borne a disproportionate amount of the cost in the supply chain, as the risks within the market place were shunted down to farm level at an alarming pace.
“As we leave the EU, the UK dairy market needs to be commercially focused, innovative and resilient in order to tackle the challenges and opportunities the change will bring.
“At times when the market is under pressure, milk buyers often have the discretion to change contracts terms and pricing mechanisms, even to introduce retrospective penalties and price cuts without negotiation.
“A headline milk price is of no value whatsoever if a buyer has the sole right to change it at will.
“We need to be able to share risk along the supply chain much more effectively than we currently do.
“At the moment, there is no incentive for a milk buyer to look up the supply chain to manage their risk, as they know much of it can be managed by pushing the risk down to a farm level. The NFU has been working with all the UK farming unions to improve dairy contracts, and we will be consulting widely with our members through our website and in virtual meetings to get a range of views that will form the basis of our submission to government.
“Farmers can either contact us directly from today or respond to the consultation individually.
“This is a once in a lifetime opportunity to build a better future for the UK dairy sector.”