Dairy voluntary code review should finish by August

The long-awaited review of the dairy industry’s voluntary code should be completed by August.

Independent chairman Alex Fergusson MSP is now reviewing the evidence he has been sent, after the deadline for submissions passed on 17 April.

He will meet with representatives of supply chain body Dairy UK in the next three weeks and then schedule full meetings with the other key stakeholders, the NFU and NFUS, to work on changes.

Mr Fergusson said: “I would like it to be out of the way by August.

“We agreed right from the start we do not want to prolong the process but we want to get it as right as we possibly can.

“Getting all the players around the table is almost the biggest challenge we face.

“I do not want to put a timescale on it.”

The biggest dairy processors have spoken publicly about the changes they want made to the code, which aims to create fair contract terms between dairy farmers and milk buyers, and currently covers about 85% of the UK milk supply.

The main sticking points have been the exemption of the co-operatives from the three-month notice period for farmers to leave contracts and the 30-day notice on farmgate price cuts.

Dairy Crest CEO Mark Allen said Arla’s announcement last week of a price cut for May with three days’ notice was “unacceptable” and showed the code did not provide a level playing field.

Ronald Kers, CEO of Muller Dairy UK, told Farmers Weekly in the autumn that the industry would suffer unless a solution was found on the question of exemptions from three-month notice periods.

But Mr Fergusson said the best time for public comment would be when the review concludes.

He added: “It would be enormously helpful for everybody involved if comments were kept in the context of the review.”

NFU chief dairy adviser Rob Newbery said there had been good progress in meetings so far on exclusivity in milk contracts.

He also said the review group was looking at how private businesses might use the three-month exemption the co-ops receive, either by letting elected farmer representatives negotiate longer notice periods or by using transparent formula pricing.

And it will also explore exactly how the code applies to a co-operative such as European-based Arla, whose pricing followed rules set outside the UK.

Mr Newbery said: “Farmers want more choice in contracts, clarity in contracts and certainty in contracts.

“We do not want people taking backwards steps on commitments [in the review] and if we think that changes will adversely affect farmers we won’t support them.”