Dairy Crest is to ring the changes with an overhaul of its dairy farmers’ milk contracts including a two-year fixed price deal.
The firm says the new contracts, which will take effect from summer 2010, are part of its strategy to increase the proportion of milk it buys from direct suppliers and will provide farmers with more straightforward terms and greater transparency.
Milk procurement director Mark Taylor said, as part of a lengthy consultation process, he had met more than half of DC’s supply base face to face. “It’s evolution rather than revolution. Our suppliers told us they wanted simpler contracts and adjustments that were positive rather than negative. The changes to our basic contracts won’t affect our standard litre price but will give farmers the opportunity to get more out of their contracts over time.”
Dairy Crest is also introducing two new contracts. One, based around the firm’s Milk & More doorstep business, will offer a two-year fixed price for farmers worth 0.25p/litre over DC’s standard litre. There will also be a 2p/litre plus-or-minus hedge to account for dramatic market movements.
The second contract will be aimed at larger suppliers, initially pegged at those producing 4m litres a year and more. It is aimed at making the most of efficiencies in large-scale production and transport arrangements and level production profiles.
DC is also to outsource its farm assurance auditing to third party ABAgri, while its Direct Supply Managers will focus on working more closely with producers.