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Dairy industry is “not working”

Created on 16/05/2011 @ 16:18
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NFU Cymru is encouraging dairy farmers to lobby their MPs, AMs and milk buyers to ensure fairer milk contract terms and eliminate unfair commercial practices in the dairy supply chain.
NFU Cymru Deputy President Stephen James said: “I want to make this quite clear – the dairy market in this country is not working, which means that dairy farmers are losing out. The British dairy industry should possess many advantages ranging from growing demand to efficient milk producers and a good climate for producing milk. Yet the industry lurches from crisis to crisis and has suffered over a decade of underinvestment and low profitability.
“For dairy farmers like me, undoubtedly the biggest problem is the one-sided milk contracts that we are obliged to sign with our milk buyers. These contracts offer little to no certainty or clarity on the way milk prices are calculated, they lock dairy farmers in for long notice periods of up to eighteen months, provide no ability to supply milk to any other buyer, and have no exit clauses to get out of a contract if the price drops to an unsustainable level.”
The European Commission recognises that contractual relationships between milk producers and purchasers are fundamental to ensuring fairness in the dairy supply chain, and has come forward with a package of measures, which include improvements to milk contracts, which Mr James said could make a real difference to the way dairy farmers sell their milk and negotiate with milk buyers.                                      
“There are some exciting proposals on the table which would strengthen dairy farmers’ position in the food chain and introduce new minimum standards for milk contracts across the EU.
“It is vital that farmers call on their MPs, prospective AMs and dairy companies to take action now to eliminate unfair commercial practices and improve milk contracts. A ‘do nothing’ approach will see dairy farmers continue to be deprived of their fair share of profits in the food chain. This will lead to underinvestment, lower milk production and will mean that dairy farmers continue to leave industry at an alarming rate.
“This is a unique opportunity to bring about much needed change, and dairy farmers should seize it with both hands,” he added.
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