Dairy farmers asked for views on mandatory milk contracts

After two years of promising it, the government has launched a UK-wide 12-week consultation on the introduction of mandatory terms for milk contracts.

This follows a review of supply chain fairness by the groceries code adjudicator which found an uneven distribution of power in the dairy supply chain.

Laws on compulsory written milk contracts between farmers and processors have been introduced in 13 EU member states in recent years, including France and Spain. The Australian government has also recently introduced a mandatory dairy code of conduct.

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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.

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

Fairer terms

NFU dairy board chairman Michael Oakes said: “Dairy farmers want to place themselves in a more sustainable position for the long term, and dairy contracts are at the heart of this.

“We want to see flexible and innovative regulation that not only delivers fair terms for farmers, but an equitable balancing of risk between farmers and buyers.”

Proposals include an option to introduce a mandatory pricing mechanism within all contracts between dairy farmers and processors, said the Defra statement launching the consultation.

This would ensure the price paid for milk produced by the farmer is formally agreed within the contract, and that contract negotiations take place in a clear and transparent way.

Defra viewpoint

Farm minister Victoria Prentis said: “It is absolutely vital that our dairy farmers are paid fairly for their high-quality produce and I am committed to cracking down on any unfair practices within the UK dairy industry.

“I welcome all views to this consultation to determine how best we can guarantee fairness across the supply chain. This will help the industry continue its vital role in feeding the nation and ensure our dairy farmers can continue to be competitive in the future.”