UK Farm unions were this week pushing hard for the introduction of compulsory contracts setting out fair terms between milk producers and processors – but some within the industry responded by warning that forcing the issue could lead to ‘disaster’ for dairy farmers.
The contract call was kicked-started by dairy representatives from NFU Scotland, NFU England and Wales, the Ulster Farmers Union and NFU Cymru at a meeting Birmingham. NFUS milk committee chairman John Smith said: “Scotland and the rest of the UK is a good place for dairying for all involved, but the current situation with regard to pricing is far from fair.
“We have to redress the balance of influence and power of the milk buyers and supermarkets, and we believe the way to do this is having compulsory milk contracts which we would like to see in place by the end of this year. It’s all about farmers knowing what their price will be, while at the same time buyers need to know what volumes they can expect.”
All four UK farming unions have welcomed the fact that the government had listened to their call, in the Grocery Code Adjudicator consultation, for a fairer supply chain, alongside Defra’s recognition of the need for more balanced contracts between farmers and first purchasers.
“That said, the blunt wording of the current EU regulation on milk contracts isn’t suitable for our diverse UK dairy industry – this is one of the reasons the UK opted for the voluntary code of conduct for contracts when the EU regulation first came into force,” said Mr Smith.
“Rather than rush through a text developed for the whole EU dairy sector, we would rather work with government on improving this text to achieve better results for UK dairy farmers and dairy processors. This needs to go hand in hand with better farmer representation and better market data. These are three corners of a triangle that will help ensure more fairness in the supply chain. Regulating on one of these areas isn’t sufficient.”
But dairy industry analyst Ian Potter condemned the idea of compulsory contracts as ‘a non starter’. Mr Potter said: “Compulsory contracts forced through at short notice with minimal consultation will in my opinion be a disaster for UK dairy farmers…
“It is…ill-conceived and should be binned as soon as possible before it inflicts financial damage.”
A spokesman for Dairy UK was more diplomatic in its criticism: “Dairy processors want to see the dairy sector work with governments of the UK to ensure any regulatory framework meets the needs of the industry. Any future framework has to give purchasers the flexibility to operate effectively in a dynamic and competitive market place whilst addressing producer concerns over stability within contract terms.
“The post-Brexit environment will be a challenging time for the sector and it cannot afford to be disadvantaged by an EU regulatory framework that is not compatible with its needs,” added the spokesman.
Source: The Scotland Herald