The NFU is committed to working with the rest of the supply chain to achieve fair and equitable dairy contracts.
However, we will not shy away from calling for government intervention to ensure our members get a fairer deal.
NFU dairy board chairman Mansel Raymond will make that commitment at this year’s Dairy and Livestock Event and urge processors to grasp the nettle on the voluntary code of best contractual practice.
“It is simply not an option for farmers to go on seeing farm gate milk prices, which bear no relation to the value of dairy products or farm costs”, he said.
“Milk buyers either need to take responsibility for their suppliers and pay a price linked to costs of production, market linked formulas; or the market needs to function to allow competition to have a real and timely effect on farm gate milk prices.
“Either way the status quo cannot be considered a viable option for future team working.”
The NFU will spell out the current situation during at the sector’s biggest show today (Tuesday, 3pm).
Mr Raymond will draw on the weighted European average farm gate milk price (31 pence per litre), the world average price according to figures compiled by the LTO (near 34ppl), and the Average Milk Price Equivalents and Milk for Cheese Value Equivalents, the market indicators which form the basis for the NFUS’s milk price formula, (both over 32ppl).
He added: “These statistics speak for themselves. Roughly speaking, we are seeing about 10 billion litres of milk being sold on average 4ppl below its worth or below its cost to produce; that’s £400 million per year or roughly £40,000 per farm. It’s no wonder investment in the future is so hard to manage or to justify.
“Following the publication of proposals for legislation around milk contracts by the European Commission, Defra Minister Jim Paice has challenged the dairy industry to agree a voluntary code of contractual best practice - I have accepted this challenge.
“By identifying the best elements of dairy contracts that offer the best prices in the market, as well as the worst elements of those contracts that fail to reward farmers for their efforts, we can work together towards mutually beneficial trading terms for the dairy sector.
“We need to see a shift away from buyers having the discretion to make fundamental changes to business terms, such as price and pricing schedules, without proper consultation or transparency.
“There are challenges ahead with the dairy industry competing on the global stage, in a world with no milk quotas.
“However I firmly believe that the UK dairy supply chain can pull together and work as a team. Together the industry must innovate and excel to produce the high quality dairy products that will compete on the domestic and world markets.”
- Find out more about the NFU’s Back Dairy campaign here.
- Find out more about the Dairy Event and Livestock Show 2011 here.
No comments have been made.