Dairy cows coming in for milking © Tim Scrivener© Tim Scrivener

The dairy voluntary code has “served its purpose” and it should now be brought into legislation, according to Farmers For Action (FFA) chairman David Handley.

The dairy industry voluntary code of best practice on contractual relationships was agreed in autumn 2012 to promote fairer and transparent milk supply contracts at the time of the SOS Dairy crisis.

Mr Handley told Farmers Weekly: “We were present with former farm minister Jim Paice when we signed up to the code at the Royal Welsh Showground.

See also: Producer organisations – what they offer farmers

“He said that if it was shown not to be working a couple of years on then he would use different tools to make it work. Well, it’s definitely not working and we feel it should be brought into legislation.

“Jim told everybody to get behind [the voluntary code], but they haven’t.”

Mr Handley met farm minister George Eustice in London on Tuesday (22 November) when he made the case for legislation to bind contracts between dairy farmers and milk processors.

In particular, Mr Handley urged the minister to:

  • Encourage moves to give more power to the groceries code adjudicator, right down the dairy supply chain
  • Introduce legislation that sets out minimum good practice in terms of contracts between milk processors and producers

During the meeting, Mr Handley raised his concerns about Muller’s proposal to disband its Direct Milk producer organisation (PO), which he described as “one of the most serious issues facing the UK dairy industry”.

Code ‘needs reworking’

NFU chief dairy adviser Sian Davies insisted that the code had led to some improvements, but not a wholesale change of behaviour from milk buyers.

She said: “Many dairy farmers continued to be treated unfairly, with contract terms changed with little or no notice and verbal assurances offered by milk buyers but then rescinded.”

Ms Davies said the NFU was not currently seeking to turn the code into legislation, but instead looking at revisions that could strengthen it.

“We need to go back to day one when the code was signed and think: ‘what did we want back then?’” she added.

“How can we get a minimum requirement so that every milk contract abides by them? There would be flexibility for buyers to go over and above the terms, but they could not go below them.”

Commission report

The European Commission published a report on Thursday (24 November) into the impact of the “Milk Package”, an EU policy response to the 2009 dairy market crisis.

The report supports many NFU Dairy Board demands, including fairer, more balanced milk contracts, stronger producer representation and more transparent, trusted market data.

Commenting on the report, Ms Davies said: “The thrust of the commission report is on the role of dairy producer organisations.

“This is something the NFU has always promoted and encouraged. We are saddened to see that many UK milk buyers, large and small, see POs as a threat and have publically said that they will not work with farmers who are part of a PO.

“Today in the farming sector, collaboration is key and the NFU sees POs as a vital part of developing new relationships in the UK dairy sector.”