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19 February 2013|Dairy,News

Arla launches direct milk supply contract


The first milk supply contract fully compliant with the new voluntary code of best practice has been launched by Arla Foods.

The new Arla Direct deal features liquid and compositional variations, a volume bonus for larger producers, seasonality options and a 12-month notice period, with the three-month trigger as specified in the code.

"This is an important and positive step for Arla Amba’s UK dairy business. It is vital that the Arla shows strong leadership and a commitment to equitable contractual relations with farmers suppliers" said NFU dairy board chairman Mansel Raymond.

The dairy coalition warned in January that milk buyers must implement the dairy industry code in contracts or face the consequences'.

The coalition, NFU Cymru, the NFU, NFU Scotland, FFA, TFA, WFU and the RABDF also called for further price rises, urgently needed by farmers to be forthcoming, and that companies not complying will be made public.

"It is the responsibility of every milk buyer to ensure the voluntary approach to improving milk contracts succeeds. The alternative is legislation and the coalition will not rest until we see better more balanced contracts for dairy farmers" said Raymond.

NFU Cymru Deputy President Stephen James said, "The coalition has laid down the challenge to David Heath to put his full support and force behind the full implementation of the code."

"As a coalition we are committed to the success of the code and trust the UK Government to be equally committed. That said, we welcome David Heath’s recent challenge to processors, when he told the Dairy UK board, that if contracts do not improve via the voluntary route, the UK Government will look to legislate."

It has been launched as part of the cooperative's recruitment drive to secure an additional 500 million litres of milk in the UK and is being offered at a standard litre* price of 30.02ppl.

"Within the dairy contract code, there are specific exemptions for potential and existing co-operative members, for instance the right to terminate a contract on three months’ notice does not apply" said Raymond.

"The NFU firmly believes that producers should be offered the freedom of choice between the commitment and longer term benefits of being a co-operative member or a direct supply relationship, as defined by this important new contract.

"The NFU is committed to achieving better and more balanced contracts for its dairy farmer members. We congratulate Arla on taking this important first step and urge all other milk buyers to fundamentally review their milk supply contracts to ensure full compliance with the dairy contract code."

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