Farm leaders and dairy processors have agreed the principles for a voluntary code of practice that will oversee the relationship between milk buyers and producers.
The agreement followed more than three hours of talks brokered by farm minister Jim Paice at the Royal Welsh Show.
Farm leaders and dairy processors met for more than three hours at the Builth Wells showground on Monday (23 July).
At one point, both sides were in separate rooms with Mr Paice acting as a go-between.
But it has now been agreed that a code of practice will cover negotiated contracts, milk pricing and the terms under which a farmer can terminate a supply, including notice periods.
Details are due to be finalised by the end of August.
A source close to the talks told Farmers Weekly: “It will be easier for farmers to leave contracts if they don’t like the price they are being paid.”
Talks on the code have been ongoing for months.
But the recent round of price cuts – and resulting protests – have ratcheted up the pressure for an agreement between farmers and processors.
A fourth night of protests on Sunday (22 July) saw dairies blockaded by hundreds of farmers in Somerset and the West Midlands.
Blockades included the Robert Wiseman Dairies plants at Bridgwater, Somerset; and Droitwich Spa, Worcestershire.
Processing plants were also blockaded in Shropshire.
Earlier, Mr Paice met his ministerial counterparts from Scotland and Wales.
The ministerial meeting on Sunday saw Mr Paice hold talks with Welsh deputy farming minister Alun Davies and Scottish rural affairs secretary Richard Lochhead.
In a statement, all three politicians agreed that the dairy sector should have a profitable and sustainable future.
The industry needed to address both the immediate issue of the price paid for milk and also the structures and mechanisms that would help underpin the viability of the sector.
A code of practice on milk contracts was in the interests of the whole industry at this stage, said the ministers.
The industry should reach a rapid agreement, with effectiveness of the code to be subject to review within a year.
Mr Paice said he would raise within government the possibility of a role for the Grocery Code Adjudicator in providing a means of arbitration for any code.
Producer organisations were key to addressing the current imbalance in the market place in the longer term, he said.
For more on the milk crisis see our dedicated page