Dairy industry leaders are on track to agree a full code of practice overseeing the relationship between farmers and milk processors, according to farm minister Jim Paice.

Mr Paice said he was optimistic an agreement would be reached by the end August – a target set out during talks at last month’s Royal Welsh Show.

“I am optimistic but I also think it is important that it is resolved,” he told Farmers Weekly on Tuesday (14 August). “Part of the reason is that we’ve still got uncertainty.”

Although processors had abandoned milk price cuts due to come into effect in August, Mr Paice said they had done so in large part on the back of promises given by supermarkets.

In some cases, revoking the price cuts had been a temporary measure, making it all the more important a full code of practice was agreed on time.

“Clearly we mustn’t rest on our laurels and we need to move forward,” said Mr Paice.

The code aims to ensure that contracts between farmers and dairy processors will be freely negotiated, fairer and more transparent.

“Producer organisations do not have to be big companies – they can be a marketing group, using the power of their supply to influence terms and conditions.”
Farm minister Jim Paice

It will cover issues such as pricing, terms and conditions regarding notice periods and enable farmers to leave contracts more easily if they are unhappy with milk price changes.

In the slightly longer term, Mr Paice repeated his assertion that producer organisations offered farmers the opportunity to help secure a better future for the dairy sector.

The NFU is setting up a database of dairy farmers interested in setting up producer organisations that would collectively market milk on their behalf.

Mr Paice acknowledged that some farmers had their fingers burnt investing in Dairy Farmers of Britain, the farmer-owned cooperative that went into receivership in 2009.

Other milk producers had also invested in co-operatives, although they were now beginning to see reward for doing so in the form of dividends, he said.

Mr Paice added: “Producer organisations do not have to be big companies – they can be a marketing group, using the power of their supply to influence terms and conditions.”

The potential of producer organisations will be highlighted at a conference organised by the NFU and farm cooperative First Milk in Penrith on Tuesday (21 August).

Mr Paice is due to speak at the event, which will also be addressed by First Milk chief executive Kate Allum and NFU chief dairy adviser Rob Newbery.

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