Have your say on dairy contracts – consultation closes next week

There is just a week left in which to shape dairy contract reform by responding to Defra’s consultation.

This suggests the introduction of mandatory terms for milk contracts, following a review by the Groceries Code Adjudicator that found an uneven distribution of power in the dairy supply chain.

The consultation questions include pricing, volume and timescale issues, termination and notice periods, flexibility within contracts, bonuses and deductions, exclusivity clauses and methods of dispute resolution.

See also: Analysis – what could reform of milk contract law achieve?

There is an option to introduce a mandatory pricing mechanism in all dairy farmer-processor contracts.

Bargaining balance

It also asks whether producer organisations should be promoted as a means of improving the bargaining balance in the supply chain.

In a recent Farmers Weekly Talking Point, NFU dairy board chairman Michael Oakes urged those who thought they were not be affected by unfair practices at present to get involved with this consultation for the benefit of colleagues or neighbours who were not so fortunate.

“In the past few months, we have seen a large number of cases where farmers have borne a disproportionate amount of the cost in the supply chain as the risks within the marketplace were shunted down to farm level at an alarming pace.

“This is unjust, unfair, and cannot be allowed to continue.

See also: Dairy contract reform – how did we end up here?

A position paper on the topic by NFU Scotland said: “The UK farming unions want to see freely negotiated and flexible contracts which are tailored to the needs of both buyers and farmers.

“Fairer contracts should increase transparency and trust, to the benefit of both, and mean that any changes need to be mutually agreed.”

It has also said there should be a greater role for producer organisations.

One new farmer-led organisation has already been established, CU Farms, which backs contract reform and aims to continue to campaign for change in the dairy industry after the consultation has closed.

A statement by five of its founding farmer members said: “Around 40% of UK dairy farmers are currently receiving an average of five pence a litre more than the remaining 60% for exactly the same standard Red Tractor accredited milk.

“We would say that even the highest price milk isn’t a fair share for our UK dairy farmers.”

The organisation says a critical piece of change arising from the consultation needs to be the establishment of an independent dairy code adjudicator to rule on contract grievances and publish pricing information.

“Let’s not accept a mandatory code administered by an in-house processor/pet farmer quango,” the statement said.

“It would be a lion without any teeth – otherwise known as a pussycat.”

The group has members with production totalling more than 300m litres and is inviting more farmers who are interested in joining to visit their website.