Dairy Farmers of Britain has launched a new pricing schedule that has been welcomed by the NFU and Milk Development Council.
The move, which will apply to the vast majority of the co-op’s 3250 members, comes in the wake of recent calls for contracts that better reflect the end use of farmers’ milk.
However, DFB membership director Matt Sheehan said the co-op had been thinking about the changes for some time.
He said they were needed because the co-op was buying about three-quarters of its milk under compositional manufacturing contracts, which pay extra for protein and butterfat, when most was sold to liquid customers.
From 1 October 2006, 75% of members will be allocated a new liquid contract, with manufacturing contracts covering the majority of Wales and Cumbria.
Small localised pools for specific customers could also be developed in the future, added Mr Sheehan.
Most producers would be neutrally or positively affected, said Mr Sheehan, but he conceded that a small minority with high compositional values moving off manufacturing contracts could lose out.
“We will be working with them to help them adjust to the new conditions.”
Tom Hind, chief NFU dairy adviser, said: “This makes all the right noises in respect of raw milk contracts.
Raw milk should be tied in much more closely with market needs to help drive some structure into the industry and promote efficient supply chains.”
The MDC’s Ken Boyns said DFB’s move was in line with its report’s recommendations.
“Hopefully others in the industry will also start to make changes.”