The government has been urged to introduce fresh legislation to ensure dairy farmers are offered fairer contracts and receive higher milk prices.
The NFU said immediate action was needed “create a brighter future” for British dairy farmers and ensure the industry was to survive.
Speaking a discussion with MPs at the House of Lords on Tuesday (17 May), NFU president Peter Kendall said the UK dairy market was not functioning properly and contracts must be improved to eliminate unfair commercial practices.
Urging MPs to back the European Commission’s upcoming dairy package – which will highlight the imbalance in bargaining power between farmers and processors – Mr Kendall said the government needed to set basic requirements for dairy contracts to ensure producers get a fairer price.
He said the Commission’s proposals to allow member states to introduce minimum legal standards for milk prices, volume and contract termination rights were a step in the right direction for the industry, which is seeing dairy farmers leave at a rate of ten a week.
Amongst a series of recommendation from the union, a standard template contract should also be drawn up as an example of best practice, he added.
“Dairy farming is a long-term industry that needs stability in price and we need contracts to give confidence and allow producers to invest and move forward,” Mr Kendall told a cross-party group of MPs.
“If DEFRA wants to see agriculture become less dependent on public support and become more market orientated we need fairer conditions in place.”
Mansel Raymond, NFU dairy board chairman, said the phasing-out of milk quotas in 2015 meant there was a real fear buyers would be in control of milk volumes in current dairy contracts.
“It doesn’t make sense that farmers are locked in to only selling their milk to one buyer,” he said.
“If we could have flexibility to sell to more than one buyer it would encourage processors to add value to contracts and see producers get fairer prices for their milk.
“Unless prices increase we won’t see investment to improve efficiencies or meet NVZ regulations.
“There’s a great future for British dairying but without improved contracts we wont be able to turn the corner.”