More dairies commit to fair contracts as code reaches anniversary

One year on from the historic signing of the ‘heads of terms’ agreement for what became the Dairy Industry Code of Best Practice for Contractual Relations, three more dairies are now committed to the code.

Barbers, Trewithen dairies and Wyke Farms are all at the final stage of drafting and roll-out of their respective new milk supply contracts. These developments follow constructive and positive dialogue with farmer suppliers and the NFU.

In addition, Tesco have adapted the terms of their supplementary contract with TSDG core farmers to fully comply with the code, while both Yeo Valley and Nom Dairies have reiterated support for the code in relation to their supplies of milk from third parties, despite not buying milk directly from farmers.

NFU dairy board chairman Mansel Raymond said: “While progress is being made the work of the NFU and the Dairy Coalition continues. We are delighted to see three more dairies become compliant, and we will be redoubling efforts to convince other milk buyers to commit to the code, so that farmers can have confidence and trust in their relationship with their milk buyer.

“We are acutely aware of the short-term financial difficulties faced by many farmers. High costs during the winter have left many of our members in a very difficult place this summer and price rises are too slow coming from the market place. So we are calling on milk buyers to deliver a fair and sustainable milk price for farmers.

“According to recent DairyCo analysis of European farm gate milk prices (LTO league table, UK processor prices relative to Average European prices) and also the latest AMPE and MCVE figures, some British milk and dairy buyers are off the pace when it comes to delivering a fair and sustainable milk price to British farmers.

“As we highlighted in the recently launched ‘Compete to Grow’ vision and strategy for the British dairy industry; farmers need confidence to maximise the opportunities for growth that lie ahead. That confidence must be built on a foundation of equitable contracts and a sustainable price for their milk.”

The Royal Association of British Dairy Farmers’ chairman, Ian Macalpine said the dairy sector is facing 'huge opportunities for growth' but to succeed, it required 'the entire industry's support', he told a briefing at the Livestock Event earlier this month.

“All the signals are that the world market should give the industry an opportunity to thrive in the future, and RABDF Council, made up of 13 dairy farmers from throughout UK, is enthusiastic and optimistic about the future.

“To that end, I think and wholeheartedly believe that the industry should work together to grow. That’s because growth will only happen with producers’ enthusiasm and drive for efficiency; growth will only happen with the supply chain working together, and that includes retailers and the trade we see here today. And finally, growth will only happen if we show we are a professional industry fit for purpose that deserves the respect of the market.

“Consequently, I believe we need to involve the entire industry – not only the farmer, the foodservice sector and retailer, but all the supply trade here at the event. We need to sit down and work out a way forward, agree the milestones and even consider changing the way we do business.”

He added: “Today, we can witness progress is already in action. We, RABDF has progressed this Event in the last few years moving out of the cowsheds into the professional arena. We have worked with the trade in developing the event and we have understood and felt its pain of the last 12 months. Here is the opportunity today to pass on the innovations and efficiencies the trade has developed for producers to help them progress their businesses.”

DairyCo's Farmer Intentions Survey results for 2013 reflected the challenging year experienced by dairy farmers across the UK, with a significant increase in the number of dairy farmers saying they are uncertain about the future.

Confidence levels dropped, although to a lesser degree than may have been expected.

“The events of last year, particularly the weather, meant confidence levels were lower than in the previous survey,” says AHDB DairyCo senior analyst Patty Clayton.

“In rating their confidence over the next 12 months, 43% of farmers returned a score of four or five [five being extremely confident]. The proportion returning these scores increased marginally to 46% for measuring confidence over the medium term (the next five years).”

Clayton highlights that while the weather was one of the top three factors affecting confidence over the next 12 months, it did not appear as a significant factor affecting confidence over the next 5 years.

The strong sense of uncertainty that emanated from the survey responses this year was reflected in dairy farmers’ production and investment intentions.

“There was a noticeable increase in the proportion of farmers who were undecided on production levels two years from now, up from 5% in 2012 to 13% this year,” says Mrs Clayton. “At the same time we haven’t seen a huge drop in the proportion of dairy farmers intending to increase production.”