Consultation launched to tackle unfair practices in dairy sector

The 12-week consultation seeks to end any unfair practices in the UK’s dairy sector
The 12-week consultation seeks to end any unfair practices in the UK’s dairy sector

Farmers have been urged to have their say in a new UK-wide consultation looking to tackle unfair practices across the dairy sector.

Farmers and dairy processors are being consulted on new, fairer conditions for their milk contracts.

The NFU is urging dairy farmers to engage with the long-awaited 12-week consultation.

Evidence gathered during the Groceries Code Adjudicator (GCA) in 2016 highlighted how unfair practices have persisted in the dairy industry.



The evidence suggests unfairness in the supply chain has sometimes been caused by milk buyers having the power to set and modify the price in a contract, often with little notification.

This leads to uncertainty and pricing that is unfair to dairy farming businesses, the GCA said.



The UK government, along with the devolved administrations in Scotland, Wales and Northern Ireland, have worked together to launch the consultation.

Proposals set out include an option to introduce a mandatory pricing mechanism within all contracts between dairy farmers and processors.

This would ensure the price paid for milk produced by the farmer is formally agreed within the contract, and that contract negotiations take place in a clear and transparent way.

Defra's farming minister Victoria Prentis said it was 'absolutely vital' that dairy farmers were 'paid fairly' for their produce.

“I welcome all views to this consultation to determine how best we can guarantee fairness across the supply chain," she said.

"This will help the industry continue its vital role in feeding the nation and ensure our dairy farmers can continue to be competitive in the future.”

The NFU is urging dairy farmers to speak up for a 'more effective' dairy supply chain, with 'fair terms' for farmers.



NFU dairy board chairman Michael Oakes said the industry wanted to see 'flexible and innovative' regulation.

During the Covid-19 pandemic, the union said it had seen cases where farmers had borne a 'disproportionate amount' of the cost in the supply chain.

"The risks within the market place were shunted down to farm level at an alarming pace," Mr Oakes explained.

"At times when the market is under pressure, milk buyers often have the discretion to change contracts terms and pricing mechanisms, even to introduce retrospective penalties and price cuts without negotiation.

"A headline milk price is of no value whatsoever if a buyer has the sole right to change it at will. We need to be able to share risk along the supply chain much more effectively than we currently do."

He added: "At the moment, there is no incentive for a milk buyer to look up the supply chain to manage their risk, as they know much of it can be managed by pushing the risk down to a farm level."

The NFU said it would be consulting with farmers to get a range of views that would form the basis of its submission to government.