A new action plan for the UK dairy chain has been launched by the NFU as part of its challenge to improve profitability in the sector.

And the union is urging producers to play a key role by lobbying milk buyers for better, more market-related contracts.

The NFU dairy board, which released its Vision for the Dairy Industry last September, says it has achieved some modest successes in the six months since the document was launched.

But in its latest update, released at the recent NFU conference in Birmingham, it admits that significant progress still has to be made in several important areas.

Gwyn Jones, NFU dairy board chairman, said:

“Dairy farmer confidence is on a knife-edge and we urgently need to restore transparency and fairness to the dairy supply chain.

A lot of work still needs to be done, particularly in the areas of supply contracts and pricing models.”

He said milk buyers needed to work on new contracts to meet market needs, and producers and their commercial representatives needed to play an active role.

“Farmers should remember they are not without power when it comes to driving change,” Mr Jones said.

“They should not be afraid to use it, in relation to the contracts they sign, for example.”

Supermarkets were also earmarked for attention. Mr Jones said he wanted all retailers to put the red tractor logo on all own-label British milk and dairy produce, and to commit to buying all own-label Cheddar and generic cheese from the UK.

The NFU would also work with allies to drive a new approach to competition policy and supply chain imbalance.

And it would also encourage Dairy UK and Food from Britain to develop a plan to boost UK dairy exports.

It also wanted retailers to create partnerships with farmers, and wanted to see at least one retailer create a produce partnership this year.

“We knew from the outset that delivering the Vision document would require time, determination, and buy-in from all parts of the dairy supply chain and government,” Mr Jones said.

However, he added that he had been “extremely encouraged” by the positive response to the Vision document so far.

“Already we have seen progress in key areas.

We have seen changes to contractual arrangements, the launch of two new benchmarking projects by the Milk Development Council and serious work on processor efficiency.

“And only last week Dairy UK announced the launch of a manufacturing excellence programme, a positive move by the processing sector,” he added.

robert.harris@rbi.co.uk