MEPs back mandatory dairy contracts

Dairy farmers could be given the power to negotiate better contracts with milk buyers under plans backed by MEPs.

Proposals contained in a report by Northern Irish MEP Jim Nicholson have won the support of the European Parliament’s agriculture committee. The document calls for mandatory contracts for all member states that set out the milk price payable and how the price is calculated.

Contracts would also include volume specifications, and all terms would be freely negotiated between parties.

The NFU said the move would be a major step towards re-balancing the power in the dairy supply chain.

Current milk contracts offer no certainty or clarity to farmers, said the union.

NFU dairy chairman Mansel Raymond said: “When 10 dairy farmers are going out of business every week, as is the case in the UK, it is clear something has to be done.”

“The price of milk can vary from one month to the next leaving farmers with no security of what they’ll be paid for their milk.”

Too many farmers were locked into a contract with long notice periods and no ability to alter the situation, said Mr Raymond.

“This proposal will allow for better negotiation of contract terms, both before signing and during the contract term. Importantly, termination clauses also make up part of the plans.”

The NFU believes the proposals will help redress the power balance between producers and processors to give dairy farmers longer term certainty.

In a further move, the proposals give producer organisations the ability to negotiate a higher volume of milk for their members – up to 40% of national production.

There is also guidance on how to set up producer organisations and inter-branch organisations to benefit the sector.

The report comes in response to recommendations made by the European Commission’s High Level Group on dairying. It will be put to a vote by all MEPs in the autumn.

The European Parliament and agriculture ministers must agree on the final text before it becomes law.