Voluntary Code of Practice report welcomed by NFU
NFU Cymru has welcomed a report published today by the House of Commons Welsh Affairs Committee following its inquiry last autumn in to the voluntary code of practice in the dairy sector.
Deputy President, Stephen James said, “The message we gave to the Committee in our evidence was simply that the events of last summer had to be a turning point. The decision of processors to slash milk prices last year attracted a huge amount of interest and led to headline news.
“We are still though in a situation where the long-term sustainability of the industry remains uncertain. Whilst we should now be benefiting from very favourable market conditions, the dairy sector continues to be a source of tension. Farm-gate price rises are very slow in coming forward and are some way behind global commodity markets and market indicators. This has been the problem for many years, where dairy farmers have failed to see prices rise as fast and as high as the dairy commodity markets. Yet, when these same markets fall, the milk price paid to farmers drops like a stone. This is a clear result of the exploitative nature of milk contracts and a lack of negotiating power.
“There is an insatiable and growing demand for dairy products globally. Recent global market indicators and auction results show a significant increase in the value of dairy commodities and these have risen by more than 40% since early March. The UK dairy indicators AMPE and MCVE have reached 38.8ppl and 35.1ppl respectively for April.
“This is all good, positive news and there is only one way in which the farm-gate price of milk should go and that is upwards but farm gate price increases are slow in coming forwards at 30.04ppl in March so yet again we are lagging quite a bit behind these commodity market equivalents.
“In this respect, I welcome the fact that the Welsh Affairs Committee has clearly recognised the voluntary code of Practice as an important step forward to redress the balance in the contractual relationship between dairy producer and purchaser. I hope the Committee’s insistence that all dairy processors who have not yet signed the voluntary code should do so, will not fall on deaf ears. Dairy farmers must also keep the pressure on buyers to sign up and should be asking themselves whether they want to be supplying certain processors if they are unwilling to adopt the code. This is an opportunity for the industry to work together to bring fairness, equality and transparency to the process.”
NFU Cymru Milk Board Chairman, Aled Jones said, “NFU Cymru has long called for reform to introduce fairer contracts. This was rewarded last autumn by agreement on a voluntary code of best practice on the contractual relationships between milk buyers and dairy farmers. It does offer a number of benefits and protection to farmers, but this is subject to effective implementation by all buyers of milk. I am pleased that our work has been recognised by the Committee and that they have stressed that Government should now set out precisely when and how it intends to measure the success or failure of the voluntary code. I am also satisfied that the Committee has said that should the code fail in its objectives, Government must legislate for a statutory code of contracts in the dairy industry.
“This report is a timely reminder to those milk buyers dragging their feet in implementing the code. I hope that this report and its recommendations will maintain pressure on the industry to ensure the voluntary code is a success and provides a fairer deal for our dairy farmers. All parties in the supply chain in the dairy industry deserve fair contractual terms and conditions but if this voluntary route does not work, then Government must stand ready to ensure a fairer deal through a mandatory code.”
