NFU upbeat about likelihood of significant dairy reform

Milk processors are increasingly in favour of dairy contract reform, the NFU has said.

NFU dairy board chairman Michael Oakes said large parts of the industry had moved in the past two years from outright opposition to change to acceptance that it was highly likely and they needed to be a part of it.

Speaking on the day that the Defra consultation into dairy contract reform closed, he said the union was encouraged by extracts it had seen from the submissions that processors were making to government.

“We are getting processors that are not opposing legislation, but want to work with us,” he said.

“I do not want to underestimate the task but, increasingly, they are not kicking back.

“It is very hard to argue that the situation we have now is perfect.”

He said there will still be sticking points ahead on the road to reform, but he is confident it is nothing that can not be worked through.

Processors’ concerns are likely to be centred around any surrender of their power to change milk prices at short notice without consultation with farmers, a power known as discretionary pricing.

The NFU say it should be replaced by a fixed price for the duration of the contract, or a pricing mechanism based on objective and verifiable criteria, which have been clearly communicated to the dairy farmer before a contract is signed.

The removal of discretionary pricing would enable risk to be shared, and for farmers to have more certainty over how their milk price is calculated, which could assist in driving innovation and investment in the industry, the union said.

Defra is obliged to publish a summary of responses to the consultation within 12 weeks, meaning detail on how it intends to proceed should be published before Christmas.

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