UPDATED 15 SEPTEMBER 2020:
The dairy contracts consultation has now closed, read the NFU's full and summary responses here.
The NFU is urging dairy farmers to engage with the long-awaited government consultation on dairy contracts and speak up for a more effective dairy supply chain, with fairer terms for farmers. This consultation closes on 15 September.
The government has launched the consultation after looking at the issue for two years, since a review of supply chain fairness by the Grocery Code Adjudicator found an uneven distribution of power within the dairy supply chain.
Here, you'll find everything you need to know about the consultation and how to respond. Use these quick links to navigate around this page:
- How to respond to the consultation
- Dairy contracts regulation: Your questions answered
- Read our five key points for a contracts reform
- Hear from NFU dairy board chairman Michael Oakes
How to have your say:
- Contact your regional NFU representatives to feed in to the NFU dairy team at HQ. Find your regional office details here.
- Contact the team at CallFirst on 0370 845 8458.
- Visit Defra's website and respond to the consultation directly.
- Get additional support by visiting our guide on how to complete the dairy contracts consultation.
The consultation will remain open for responses until midnight on 15 September 2020. The NFU, alongside UK farming unions have been working closely together to prepare for this long-awaited consultation, which we believe is a golden opportunity for the future of the UK dairy sector. The NFU dairy team and UK farming union representatives will be engaging with members over the coming months though a series of virtual events, in national and regional meetings and webinars.
The NFU's advisers have put together this Q&A as a guide and an informative tool aimed at answering key questions and setting out the NFUs position on Defra’s consultation on dairy contracts reform. Click here to open the Q&A.
This step-by-step guide to the questions in the consultation provides context on the background to the questions and the key issues facing dairy farmers with their contracts. It explains each question in more detail and gives examples to help you decide on your answers. It also includes an outline NFU view on each question, although the NFU is consulting with members to develop its position further throughout the process. Click here to download the step-by-step guide.
Reform of dairy contracts: Five key points
For most dairy farmers, their contract to sell milk is the single most important piece of paper they have for their business and shapes the relationship with their milk buyer. Unfair milk contracts have been an area of concern for the dairy sector for many years. A significant proportion of the calls that the farming unions receive are from farmers with issues which ultimately relate back to their milk contract.
In 2018, following an industry wide review of the Groceries Code Adjudicator, it found that there is an uneven distribution of power within the dairy sector. This led Defra and the Devolved Administrations to announce that they would launch a consultation on contract regulation aimed at improving fairness in the dairy supply chain.
The four UK farming unions (NFU, NFU Cymru, NFU Scotland and Ulster Farmers’ Union) are supportive of this approach and will be providing a response to the consultation. We have developed ideas over the past few years in consultation with our members which will be further enhanced over the consultation period. This includes the development of five key points for contract reform for a more transparent, fair and well-functioning dairy supply chain.
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.
“As we leave the EU, the UK dairy market needs to be commercially focused, innovative and resilient in order to tackle the challenges and opportunities that the change will bring. At times when the market is under pressure, milk buyers often have the discretion to change contracts terms and pricing mechanisms, even to introduce retrospective penalties and price cuts without negotiation. 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 has been working with all the UK farming unions to improve dairy contracts, and we will be consulting widely with our members through our website and in virtual meetings to get a range of views that will form the basis of our submission to government. Farmers can either contact us directly from today or respond to the consultation individually. This is a once in a lifetime opportunity to build a better future for the UK dairy sector.”
More from NFUonline:
- How to complete the dairy contracts consultation
- Dairy contracts consultation: The story so far
- Dairy Response Fund opens for applications
- Read our Q&A on how to apply, who is eligible and what the timescales are for applying
- Coronavirus: Dairy sector and COVID-19 Q&A