Robert Wiseman Dairies has pledged to rebuild trust with farmers as it devises a new formula that will determine how much it pays producers for milk.
The processor said it had reached an agreement with dairy farmer representatives to collaborate on an initiative that will determine how farmgate milk should be valued.
The mechanism that will determine the farmgate price remains unclear. But Wiseman said its "Wisemilk Initiative" would use the proposed Voluntary Code of Practice as a framework.
Calculating the price would be based on work to be undertaken by four farmer representatives of the Wiseman Milk Partnership and directors from Robert Wiseman Dairies.
Wiseman said a particular focus would be placed on finding a transparent way of determining farmgate milk prices so farmers could plan more effectively, within the context of a free and fair market.
The Wisemilk Initiative team would call on independent consultants and interested parties during the course of the work, which was expected to take a minimum of three months to complete.
The first meetings are scheduled to take place this week.
"We cannot ignore the ups and downs of a market, but we have to strengthen the basis of the partnership we have with dairy farmers," said Pete Nicholson, Wiseman milk procurement director.
"There is a shared belief that steps can be taken to remove the tensions and lack of clarity that exist in the supply chain at the moment," he said.
"It's time to start the process of rebuilding trust and we will work diligently and constructively in order to achieve this end."
Roddy Catto, chairman of the Wiseman Milk Partnership, said he hoped the initiative would be the first step towards greater levels of transparency and honesty in the milk price setting process.
"There is a lot of work to do if dairy farmers are to have the basis from which they can move forward, invest and see a future in dairying.
"Confidence has been badly shaken and there remains a great deal of anger among dairy producers who rightly feel that they are being asked to do the impossible - produce milk for a market that right now is not returning enough to cover costs."
Johann Tasker on G+
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