The NFU has finally launched its model dairy contract, which it reckons is going to offer dairy farmers better negotiating powers over milk prices and contract length.

http://www.fwi.co.uk/Articles/2007/11/19/108455/nfu-launches-model-dairy-contract.html

What do you think? Will processors listen? Would you add anything else to the contract?

Have the processors/buyers/supermarkets listened to anything we have said over the years?. The answer - they have  only responded   to the current shortage  and  really indicated  this to  be  the only time they will  be prepared to pay  a fair rate for the milk we produce.. If we produce more  and more - will any  processor /buyer   agree  with the contract the NFU have produced?.  If they don't -what then?.  I would have thought that with all the "thinking" that has been   done  over a long period by the Unions, it would be very surprising if    any milk producer  could think of anything  that hasn't already been covered. Does this  dairy contract apply  equally to direct sellers  and to  co-op suppliers?. What do the co-ops think of it?. What do Arla, Wiseman  and the rest of the buyers think of it?.  What does  Potter think of it?. Lots of questions needing answers  from  many sources.  Or is it possibly,  like most things in this bureaucratic socialist state of ours  - just talk,  to encourage us  to "hang on  in there"   and be content  to be  their slaves?.   We can only dream of the powers of the MMB!!!

If anyone does take the advice of the NFU on contracts, it will lead to no more than tinkering with existing contracts at a superficial level.  When the newly formed International Federation of Dairy Producers gets its way, the Arla Foods Milk Partnership, for instance, will have its lawyers draw up its own contract to present to Arla for Arla to sign.  It will contain the usual stuff: AFMP will have final say and set ex-farm price; prices may have to rise with little or no warning due to production cost increases.

The European Milk Board seems to like the ideas of the International Federation of Dairy Producers, judging from their website.  We are both saying that farmers should set ex-farm price.  If only EMB would put its weight behind IFDP, as requested, then we could really make things happen.

 The Hod,

I admire your tenacity  and hope things are back to normal  fitwise and workwise at your place. 

 Little is known of the activities of the Federation over in Europe and less still about any achievements. OK,  we can, like them  be seen from the web page mentioned,  to  publicise our problems - this has been done quite well  lately as the result of the intervention of the WI at the start   but really we are still struggling to achieve the confidence that we will be fairly treated  for the long run ahead.SHORTAGES HAVE  INCREASED PRICES - NOT FAIR DEALING.   At the moment   buyers are   queing up to persuade producers in this country that "things will be even better if we  switch to them".  Two  of the big boys are very active   - but will the co-ops suppliers be any better off in the  long run,  if they join them . Many have thousands of pounds tied up  with their own company   and  if  they  "jump ship" surely they are risking the  loss of their   own company and their  own  capital.  Once   the  big buyers have had their commitments from us and  reached their level of  requirement. What then?. How soon will it be that a new squeeze is implemented? .  Certainly the NFU contract  will not be LIKELY  to protect them.  There principles will never change  unless made to do so. Trust not the OFT report due out - they are mainly working for the consumer and in turn  the supermarkets,   who will squeeze our buyers to oblige the OFT.

Why does contact have to be made by letter with the  British Federation?. Are they coming out to openly to protect all the suppliers  -    or is their activity directly mainly at Arla as implied in your comment?.

Jack  

The European Milk Board (EMB) is a federal organisation whose constituents are national farming bodies.  The pressure group Dairy Farmers of Scotland (DFoS)have just become members of EMB.  The International Federation of Dairy Producers (IFDP) is as yet a British body.  We hope to become a European body, and then a world body, with the aim of stopping farmers in one country being played off against farmers in another country, and to stop the blatant exploitation of dairy farmers the world over.

The Federation has individual members and producer group members.  When the majority of a producer group's membership are members of the Federation, voting will make the producer group a member of the Federation.  When you get enough producer groups in the Federation, these groups move as one to insist on what they want.  The simple fact is that, if every UK producer group demands x, any buyer wishing to buy from a UK producer group has to accept the necessity of x.  What we ought to go after is what we all want, the power to set the price of your own product.

The Federation is not a body like EMB or any of its constituents, eg DFoS, or even FFA.  It is something which EMB, DFoS, and FFA, could put their efforts into building and making work, and indeed, we have contacted these three bodies on this point.

When we say that farmers should set ex-farm price, we are not talking about bucking the market.  The market dictates the general level of price, but people set actual prices, and there is no reason why those people should not be farmers.  Suppose that production is high, and markets are poor: prices will still be low.  But, there will be nothing like we have seen in the last 10 years, when at one point 60% of producers were not in profit.  If farmers are setting price, production costs are going to be a significant factor for one thing.

The Federation idea is about all types of producer groups, direct selling groups, coops, coop processing.  I talk about Arla and Arla Foods Milk Partnership just as an example of selling to an independent processor.  I think that coop members are all too trusting of their coop masters.  Going into processing is a good idea, but any plan that was drawn up should have been for the benefit of the vast majority of coop members and not just the handful that will be left when the processing dream finally pays off.  I wanted to be a coop supplier, but it was a choice between going bust or moving to direct supply.  Many people work in coops, but only the farmers have been left to suffer.  The rest of the coop structure needs to be pressured to perform, and this can be achieved by giving the job of setting ex-farm price to the Member Council.

 I can't see the problem in asking a farmer who wants to build a Federation to stick a BCMS address label on a sheet of paper together with the name of their buyer and post it in an envelope to an address.  I was the one who wanted to create a website, to get dairy farmers to use it, and to use the site for mass communication.  I was told to forget the idea.

So much money which farmers could have had over the last 10 years has been denied to them.  If the Federation does not succeed, the dairy farmer will be no more than a cog in the supermarket machine, and a slave to processors, retailers, and government.  I mention government, because we now learn that the cost of disease is to be passed on to farmers, whether we like it or not.  When government impose things on other industries, increased costs are passed on down the line.  But this doesn't happen in the dairy industry.  We can, however, get the power to pass on costs, if we can build a Federation.

The Federation idea is a brilliant one.  If others are critical, I blame myself for not explaining things well enough.  If I think people do understand but yet remain critical, I am very suspicious: they must surely have a vested interest in maintaining the status quo.

 The position of the NFU is that there is little farmers can do to affect the power of processors and retailers, so go for superficial tinkering with contracts which buyers still write, and praise supermarkets for ideas such as dedicated supply groups.  The NFU is wrong.  We can do something.  Perhaps it's just too radical, too profound.  And you might worry if the dairy industry was going to be turned on its head, but that's not the case.  All the various dairy chains can go on as before.  The only difference is that in negotiation between buyer and seller, the seller has final word on the price of the product being sold.

I bet the founders of the American Screen Writers Guild did not have any problem setting up their organisation.  It's just common sense.  The occupy a similar postion to dairy farmers.  No writing, no films and plays.  No milk, no milk industry.

I have just been to the forums at Farmers Guardian where I read a post by Wayne Gault.  Mr Gault is talking about lamb, but if he were talking about milk, he'd be a supporter of the Federation.  Mr Gault writes:

The supermarkets dictate the price...A concerted effort from all is required to improve the returns to the primary producer both in the UK and NZ.

Quite so, Mr Gault.

We took the decision to launch the Federation at this time, knowing full well that the average dairy farmer would be sitting back and relaxing with higher ex-farm prices.  The Federation is not a body which states such as "We will move to next stage if we get an n% response by date D.  The Federation is more of a snowball rolling down a slope.  It is not going to go away, and it will succeed.  In our own business, a feeling of optimism entered the bloodstream when higher prices finally filtered through, but already we are starting to worry about feed bills and electricity bills.  The idea of the Federation is going to seem a very attractive offer in the not too distant future.

And lastly, suppose you are a coop member, you like the idea of the Federation, but you are worried that higher prices might ruin the efforts of the coop.  I have suggested that the Member Council should set ex-farm price after negotiation with representatives from the processing wing of the coop.  There is nothing to stop the Member Council accepting the arguments of the Board and setting a price no different from the price the Board itself would have set.  Likewise, AFMP might decide to set the same price which Arla recommends.  The difference is that the power to set price lies with the farmer.  With the Federation now launched, it would be little short of madness to reject it and to accept living at the mercy of others, especially when the others in question have shown themslves to be merciless.  I would go so far as to say that without the Federation there is no future for dairy producers except as slaves and puppets.

Oh dear, the thread about the NFU's template dairy contract has just dropped off the first page.  Now it's back again.  I do hope that this isn't going to be another flop like the Invoicing Campaign.  I don't like the attitude of NFU Dairy: there's nothing you can do to combat the power of supermarkets and processors, so let's just talk about superficial tinkering with contracts which buyers' lawyers write.  I know that someone in the NFU has been given the job of reading this thread, so I am asking you to get someone authorised to write something here.  What I want to know is this: What fault if anything does the NFU find with the core idea of the International Federation of Dairy Producers, that producers can form competing selling groups which set the price of their own product.  If there is no fault to find, I think the NFU ought to back the Federation and help bring it about.  The usual comment from those anti is that you won't get unity to make the Federation work.  With that attitide there is literally no hope whatsoever for dairy producers.  For God's sake, think positively.  This is not about old divides over coops and direct selling.  This is bigger than that.  There is no reason why eg Arla Foods Milk Partnership shouldn't have its lawyers write a contract for Arla to sign.  I am sure that any advice on contract writing from the NFU will be very much appreciated.

Hod,

An example. Suppose a dairy farmer asks for 50p per litre. Would not the buyer say, "No way, goodbye." and find his milk from somewhere else?

Regards.

Producer selling groups will set ex-farm prices.  One factor which will figure heavily in this, and which has not done so before, is cost of production.  Two factors which will severely constrain the setting of prices are, one, the market, and two, the need to compete with other producer selling groups.  If every producer group in the world were a member of the Federation, without a shadow of a doubt farmers would be setting price.  Given this, if every producer group in the world demanded 50ppl, and justified the price to watchdogs on the grounds of cost of production and the need to reinvest constantly and on a large scale, then without a doubt again raw milk would sell at this price.  This smacks a bit of price fixing, which is not the impression we want to give at all.  Through unity we want producer groups to gain the ability to set price.  That's it.  There's no collusion.  In setting a price, you have to think about what price your competitors are setting.  The general level of price will always be dictated by the dairy markets.  Because the needs of the farmer will be given more weight, however, we will not see the terrible lows experienced in the last few years.