NFUS welcomes consultation on dairy contracts

NFUS welcomes the launch of the long-awaited consultation to seek views on the Government’s proposal to introduce legislation to effect reform in the dairy sector.

NFUS welcomes the launch of the long-awaited consultation to seek views on the Government’s proposal to introduce legislation to effect reform in the dairy sector.

The Union is urging dairy farmers to engage with the 12-week consultation which launched on 24 June and have their say in shaping a more effective dairy supply chain, with fairer terms for farmers. The Union will be holding a series of virtual meetings for its members on the week commencing 27 July.

Commenting on the launch, Gary Mitchell, Milk Committee Chair, said

This consultation could provide a pathway to a future for a dairy sector that is more resilient and innovative, something that is paramount at a time where we are moving out of a global pandemic, through the EU exit implementation period and significant changes in farm support.

A rebalance of risk and power in the dairy supply chain would offer stabilisation in the face of increased risk and volatility in markets. This is of fundamental importance to dairy farmers and to the entire supply chain, as the vast majority of dairy farmers income comes via the milk cheque and not from farm support. While global and national market forces will dominate market sentiment, the contract a farmer has with his milk buyer will dictate how the market value is shared.

There is great diversity in our supply chain and farmer base, with a range of contractual arrangements that are varying in favourability and fairness. However, most milk contracts in their current form do not create mutually balanced business relationships between buyers and sellers.

Indeed, rights and obligations are often heavily biased in favour of buyers. The efforts to address the issues such as the Voluntary Code of Practice, whilst being very welcome, have not served to achieve increased transparency or fairness.

In 2018, the Grocery Code Adjudicator review found very clearly that there was an uneven distribution of power within the dairy sector and changes need to be made now, more than ever.

NFUS recognise that the relationship between farmers and processors has improved in the last few years. Co-op and Producer Organisation structures are leading to better co-operation and putting farmers in a stronger position.

We do not want to fix things which are not broken, but we also need to address the many examples where farmers are in a desperately poor position because of their milk contract and relationship with buyers.

We see that there is a huge opportunity to change the structure of the dairy industry to make it more sustainable, progressive and improve the way farmers and processors work together for common goals.

The contract sits at the heart of the future of the British dairy sector and we are pleased that Government is consulting on this. We urge any dairy farmers to get involved in the discussion and feedback to the consultation either directly or via your farming union. This is a once in a generation opportunity to gain some real change and secure the future of the British Dairy Sector.

NFUS continues to work very closely with the other UK farming Unions who all believe this to be of great significance.

We will be holding virtual meetings on the week beginning 27 July, to allow Scotland’s dairy farmers to play a full and constructive role in this consultation. NFUS also welcomes any requests for discussions, meetings, in groups or one to one. This is potentially of significant importance to the dairy and other sectors and supply chains.

You can view the full consultation on the DEFRA website.

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