A deal to secure fairer milk prices for farmers will help secure a better future for Britain’s dairy industry, farm minister Jim Paice has said.

Mr Paice made the comments after after industry leaders agreed a voluntary code of practice to oversee the relationship between dairy processors and milk producers.

“This voluntary code of practice is a significant step forward,” he said.

“I firmly believe the code, and the collaborative way in which it was forged, will help shape and secure the long term future of Britain’s dairy industry.”

Mr Paice is expected to confirm details of the code during a the keynote speech at the Livestock 2012 event in Birmingham on Tuesday (4 September).

The voluntary code of best practice on contractual relationships between milk buyers and dairy farmers was agreed by Dairy UK, the NFU and NFU Scotland.

Buyers who sign up to the code will be required to give dairy farmers at least 30 days notice of any changes to the farm gate milk price.

Farmers will have the right to walk away from contracts by giving three months’ notice if they are are unhappy any price change.

Currently many farmers supplying milk to processors are locked into contracts for 12 months after a price reduction – even if it leaves them making a loss.

Dairy UK director general Jim Begg said it would now take “about a week” for the code to receive legal clearance to ensure it complies with competition laws.

“I firmly believe that our future depends on co-operation going forward,” he said.

“If we can pursue this on a voluntary basis then it’s got to be the way in which we can generate the level of profit that’s necessary to get the investment going forward in the industry.”

NFU dairy board chairman Mansel Raymond said the code would help farmers build equitable and trusting relationships with their milk buyers.

“This can only be achieved by putting in place fair and transparent milk supply contracts.

“In line with the Coalition’s 10 point plan we will be working with farmers and processors to see the many beneficial terms of this code translated into beneficial terms in milk supply contracts.

“Getting this code agreed is the right footing to move forward with the industry on a robust and ambitious strategy for the dairy sector, which is a priority for us.”

NFU Scotland milk vice-chairman Rory Christie described the code as highly significant.

Individually farmers can be weak, but the NFUS believe that dairy farmers working together can achieve a great deal,” he said.

“We will be continuing this collaborative effort as we work to ensure the code is implemented in the best way for our dairy members.

“We’re pleased to have taken this project across the line and thank all concerned.”

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