The UK Government has launched a consultation to find out whether new regulations could help to ensure dairy farmers are treated fairly, which the NFU is describing as a “once in a lifetime opportunity to build a better future for the UK dairy sector”.
Evidence gathered in 2016 demonstrated that unfairness in the supply chain has been caused by milk buyers having the power to set and modify milk prices in a contract – often with little or no negotiation with the farmer. This has led to uncertainty and unfair pricing for dairy farming businesses.
Dairy farmers and processors across the UK are being asked for their views on whether future regulation could be used to strengthen fairness and transparency.
The proposals include a mandatory pricing mechanism within all contacts between dairy farmers and processors, to ensure the price paid is formally agreed within the contract, and that contract negotiations take place in a clear and transparent way.
Farming 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.”
The NFU is urging dairy farmers to get involved in the long-awaited consultation and speak up for a more effective supply chain, with fairer terms for farmers.
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.
“During the Covid-19 pandemic, we have seen a significant number of cases where farmers have borne a disproportionate amount of the cost in the supply chain, as the risks within the market place were shunted down to farm level at an alarming pace.”
He added: “A headline milk price is of no value whatsoever if a buyer has the sole right to change it at will. We need to be able to share risk along the supply chain much more effectively than we currently do. At the moment, there is no incentive for a milk buyer to look up the supply chain to manage their risk, as they know much of it can be managed by pushing the risk down to a farm level.”
The NFU will be consulting widely with its members on its website and in virtual meetings to get a range of reviews, which will form the basis of its submission to government. Farmers wanting to share their views can either get in touch with the NFU or respond to the consultation as an individual.
Find the government consultation page here: https://consult.defra.gov.uk/agri-food-chain-directorate/contractual-relationships-in-the-uk-dairy-industry/