Efra report into DFB collapse offers sound recommendations to strengthen dairy sector
The NFU has described the Efra Select Committee Report on the collapse of Dairy Farmers of Britain as offering sound, sensible and balanced recommendations for a strengthened dairy sector.
Efra concludes that DFB’s members were badly let down by its senior management, and backs up the explanations offered by the receivers, PriceWaterhouseCooopers (PWC) as to why DFB collapsed.
Commenting on the report, NFU dairy board chairman Gwyn Jones said:"Despite this inquiry being a drawn out affair, Efra has made a number of positive recommendations, which–if adopted–have the ability to strengthen the British dairy industry and this can only be welcomed.
"I am particularly encouraged to see that Efra has included many of the recommendations offered by the NFU in its report; most notably recognising the need to have properly trained, skilled and supported farmer directors and emphasising the potential to improve milk contracts to significantly strengthen farmers’positions.
"Specifically, we endorse Efra’s recommendation that co-ops should enjoy similar protection to private companies and support a review of the means by which co-ops can access capital and the creation of a task force to consider ways of capitalising UK agricultural co-operatives.
"The report raises some interesting questions regarding the tax treatment of monies invested in a co-op by its members. We approve in principle with the suggestionthat members of producer co-operatives are not taxed on money retained by the co-operative until it is withdrawn, but believe that careful consideration would need to be given as to how this suggestion might be implemented.
"The dairy industry is united in its view that what happened to DFB must never be allowed to happen again and with this in mind, there are areas where we believe Efra could have gone further. Specifically, on the subject of termination rights, the NFU maintains that a dairy farmer should be able to terminate his contractimmediately on the insolvency of the processor, rather than have to give a month’s notice. We would also question why Efra limits its recommendation to receivers when the early termination provision should apply to all insolvency procedures.
"Almost a year on from DFB’s collapse many dairy farm businesses continue to suffer the consequences and no doubt there will be some businesses that may never fully recover from the financial losses incurred. I really hope that the publication of the Efra report and the analysis of events it offers will provide DFB’s members some reassurance and sense of closure to what has been a devastating period in their lives. However, words alone are not enough.
"We must now ensure that the committee’s recommendations do not simply sit and gather dust, but are taken up in full and receive an enthusiastic reaction from Defra and the dairy sector."
