NFU launches dairy contract apt for modern industry

The NFU has launched a model milk contract designed to make an ever changing modern dairy industry more equitable for all involved.

The document sets out a flexible template for the terms and conditions that the union believes should be contained in milk contracts and it is hoped it will promote discussion and lead to positive changes that will benefit the whole sector.

NFU North West dairy chairman, Mike Taylor, who farms in Carnforth, Lancashire, helped to design the contract.

Mr Taylor said: "Many of the existing contracts are a hang over from the Milk Marketing Board days. The NFU's updated contract is for the modern industry that both direct sellers and coops are now operating in. This is a new phase for North West dairy production as we continue to move away from a quota system.

"There has been some genuine progress in milk contracts in the last few years, stimulated by the NFU Vision for the Dairy Industry and the Milk Development Council's excellent report on contracts in 2005.

"But these are not grounds for complacency. We still see problems from a producer perspective in milk contracts, especially an inherent unfairness in key commercial issues such as milk price determination. And with the dangers of more market volatility going forward, it is right that we now examine the future of milk contracts."

The NFU Milk Contract contains a number of important debating points including:

· Whether there may be value for some producers in rolling term and fixed volume contracts that may allow producers to supply more than one buyer.

· The fixing of milk price and price setting in the contract with variation processes that encourage proper negotiation.

· Clarity on milk testing regimes, especially for antibiotics.

· The extent of liabilities on the part of producers and their purchasers.