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04/10/2011 17:45:58
Milk price rises 'not what they seem' - NFU chairman
NFU dairy board chairman Mansel Raymond has called for meaningful net price rises this autumn to avoid disappointment across the sector.
Speaking ahead of the South West Dairy Event in Shepton-Mallet, Mr Raymond said, while recent price moves from dairy processing companies and co-operatives were recognition of the increasing value of dairy products and commodities, production costs were still at all-time highs.
’The news of price rises has been welcomed by farmers whose own costs of production have increased significantly and look set to be at all time high levels for the winter of 2011/12,’ said Mr Raymond.
’However, while headline price rises seem significant changes to pricing schedules by some companies mean many farmers will fail to realise headline prices unless they hit new and existing top bands for quality or constituents.
’Our industry is at a crossroads. The European Commission, European Parliament, Defra Minister Jim Paice and an Efra Select Committee all say contracts need to change. We need to give farmers the confidence to invest in the future and, in order for this to happen, meaningful price rises need to come through this autumn. I fear that for many producers the net increase will be a disappointment.
’So, while I commend all buyers who have offered unconditional and transparent increases to their base price, my message to processors is farmers deserve balanced contracts and now is the time to offer them.
’If ever there was a clear call to action to dairy farmers it is this. The NFU has fought long and hard for improvements to milk supply contracts to redress the balance of power in favour of farmers. It simply isn’t acceptable for key conditions like a farmer’s pricing schedule to be changed, without due consultation and agreement, or without releasing them from the notice period of the contract. If I sign any other contract with tie in periods I expect the key terms in that contract to last at least as long as my notice period. That gives equal protection to buyer and seller. As things stand, farmers have no means of protest and cannot go to other buyers when their own makes adverse changes to key contractual terms and conditions. This practice is known as ’buyers’ discretion’, I call it unfair.’
Speaking ahead of the South West Dairy Event in Shepton-Mallet, Mr Raymond said, while recent price moves from dairy processing companies and co-operatives were recognition of the increasing value of dairy products and commodities, production costs were still at all-time highs.
’The news of price rises has been welcomed by farmers whose own costs of production have increased significantly and look set to be at all time high levels for the winter of 2011/12,’ said Mr Raymond.
’However, while headline price rises seem significant changes to pricing schedules by some companies mean many farmers will fail to realise headline prices unless they hit new and existing top bands for quality or constituents.
’Our industry is at a crossroads. The European Commission, European Parliament, Defra Minister Jim Paice and an Efra Select Committee all say contracts need to change. We need to give farmers the confidence to invest in the future and, in order for this to happen, meaningful price rises need to come through this autumn. I fear that for many producers the net increase will be a disappointment.
’So, while I commend all buyers who have offered unconditional and transparent increases to their base price, my message to processors is farmers deserve balanced contracts and now is the time to offer them.
’If ever there was a clear call to action to dairy farmers it is this. The NFU has fought long and hard for improvements to milk supply contracts to redress the balance of power in favour of farmers. It simply isn’t acceptable for key conditions like a farmer’s pricing schedule to be changed, without due consultation and agreement, or without releasing them from the notice period of the contract. If I sign any other contract with tie in periods I expect the key terms in that contract to last at least as long as my notice period. That gives equal protection to buyer and seller. As things stand, farmers have no means of protest and cannot go to other buyers when their own makes adverse changes to key contractual terms and conditions. This practice is known as ’buyers’ discretion’, I call it unfair.’
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