Dairy farmers urged to support milk contract reform

Dairy farmers have been urged to lobby MPs and milk buyers to eliminate the “unfair commercial practices” in the supply chain that are causing farmers to lose out.

NFU dairy board chairman Mansel Raymond said the UK dairy sector had suffered over a decade of underinvestment and low profitability due to the failure of the supply chain to give farmers a fair share of profits. The biggest problem was “one-sided” contracts with milk buyers, he said.

“These contracts offer little to no certainty or clarity on the way milk prices are calculated, they lock dairy farmers in for long notice periods of up to eighteen months, provide no ability to supply milk to any other buyer, and have no exit clauses to get out of a contract if the price drops to an unsustainable level.”

The NFU said government should back EU Commission proposals to provide a new compulsory baseline standard for milk contracts across all buyers and milk deliveries. It also supported plans for a new contractual code of practice to ensure fair dealings between farmers and dairy companies and the possibility of producing more transparent information on the distribution of margins and wholesale prices in the dairy supply chain. It said standard template contracts, such as its model milk contract, could be used as an example of best practice.

“A ‘do nothing’ approach will see dairy farmers continue to be deprived of their fair share of profits in the food chain,” Mr Raymond said.

Template letters for members to write to their MPs and milk buyers are available as part of the NFU’s Dairy Contracts Campaign. See www.nfuonline.co.uk/dairy