Dairy farmers have a “once in a generation opportunity” to secure their financial future, NFU dairy board chairman Gwyn Jones told a breakout session at the NFU Centenary Conference.

With milk supplies tightening and retailers ready to establish dedicated supply chains, now was the time to negotiate a better deal.

To do this, producers should make use of the NFU’s model contract, said Mr Jones. Given the “desperation for milk in the marketplace” he was optimistic most supply groups would be able to secure a contract change and a better price.

NFU chief dairy adviser Tom Hind said contracts should be amended to bring more sustainability, with fixed prices for fixed volumes over a fixed term.

Volatility

While there had been a recent downturn in the global dairy commodity markets, the greatest threat was increased volatility.

“Intervention no longer underpins the market as it once did, and with the abolition of milk quotas on the way, production and demand may not always move in line.”

But generally the world market outlook was good, he said, though there was a need to build buffers into the system to manage volatility.

“Dedicated supply chains may not be suitable for every farmer, but we’re getting to a position where retailers will underwrite a milk price that is distinct from the commodity market.”

Mr Hind shared the disappointment expressed by delegates about the recent collapse of merger talks between co-ops First Milk and Milk Link.

But there was a positive to come out of it, in that it showed that the Office of Fair Trading was not opposed to meaningful consolidation within the dairy sector.