AFMP dairy farmers get three-month notice option

Dairy farmers supplying Arla via the Arla Foods Milk Partnership (AFMP) will have the option to give three months’ notice to leave the company following a change in the standard litre milk price.

The dairy processor will adopt the “purchaser discretion” contract mechanism, as outlined in the dairy voluntary code of practice from 1 July, meaning the 1,300 AFMP members in transition to co-operative member status will benefit from the three-month notice clause in the code.

When the code was agreed in September, AFMP was categorised as “a non co-operative with groups of producers in transition to full co-operative membership” as a result of discussions between Arla Foods amba to enable AFMP members to become full members of the global farmer co-op.

At the time, the AFMP board agreed to adopt the “purchaser discretion” mechanism by 1 July if the route to full co-operative membership was still in the process of being clarified.

“Our discussions on the roadmap are progressing well and the AFMP board, the Arla Foods amba board of directors and Arla’s management team, which are working together to define the roadmap, are happy with the direction and speed in which the discussions are going. I am confident of being able to present proposals to our members in the autumn,” said AFMP chairman Jonathan Ovens.

“We have honoured the pledge we made to members last September in adopting the ‘purchaser discretion’ contract mechanism. We believe it demonstrates our confidence in reaching a successful conclusion to the roadmap discussions and that it is the right course of action for our farmer members and the industry as a whole.”

Dairy industry commentator Ian Potter predicted any resignations from the company would be minimal as price movements in the next few months would most likely be upwards.

“We have honoured the pledge we made to members last September in adopting the ‘purchaser discretion’ contract mechanism. We believe it demonstrates our confidence in reaching a successful conclusion to the roadmap discussions and that it is the right course of action for our farmer members and the industry as a whole.”
Jonathan Ovens, AFMP chairman

“If Arla continue to maintain their position as one of the leading liquid milk price setters, resignations under the code should be limited,” he said.

Arla Foods amba is the world’s sixth largest dairy company, and a 100% farmer-owned co-operative consisting of 12,400 EU dairy farmers, of which 1,600 are British following the company’s merger with Milk Link.

The 1,300 AFMP members own 3.15% of Arla Foods UK via their investment vehicle, Milk Partnership Limited. Since January 2012, AFMP increased its investment to 0.5p/litre per annum.

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