DairyCo report arms farmers with questions for milk buyers

Dairy farmers looking to sign contracts with milk buyers now have access to warts-and-all market information on each of the big seven processors.

A report commissioned by levy body DairyCo and produced by consultant Bidwells gives a detailed breakdown of the major milk buyers’ recent financial results, strategies and intentions, providing producers with specific questions for their contract negotiations.

“The report provides producers with another tool to help in negotiating the right deal for their business,” said John Moverley, author of the document and senior consultant at Bidwells.

“By providing this information we’re hoping to encourage and arm farmers to ask the right questions when hammering out a deal.

“It’s not all about prices – it’s about processors’ long-term strategies and how farmers can tailor their businesses to fit with that.

“Unfortunately differences in the nature of reporting account information mean that the financial information gathered does not allow for direct comparisons between firms but does give a picture of how they are performing individually.”

Gwyn Jones, NFU dairy board chairman welcomed the report, saying: “This is another tool to bring farmers and processors closer together and to improve supply-chain transparency.

“We would like farmers and particularly their representatives to look at this report and use it to discuss and question the strategy of their milk buyer, or potential milk buyer, in a constructive way to make sure profits for both parties are maximised.”

Key questions to ask your milk buyer

Arla If you are not able to grow milk sales further, given current contracts between retailers and processors, how will you manage your direct supply chain against a potentially static demand?

Dairy Crest What are the future plans for development of the branded business and how much GB milk are you likely to need for that?

First Milk Are you paying a milk price you can afford, as we don’t want the business to risk running out of cash?

Meadow Foods As farmers, should we be supplying milk brokers with limited ability to build long-term supply chain relationships with end-customers?

Milk Link How can we maximise efficiency in our supply chain by working together better? Do we need to raise more capital to invest in moving the business forward even faster?

Müller What are your future investment plans and how much more milk are you likely to need?

Robert Wiseman Dairies What will the company focus on after the expansion into the south east? If the company stops growing, how will you manage milk supply with demand?