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Dairy group calls on milk buyers to act on new code

By Western Morning News  |  Posted: December 14, 2012

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The farming industry says immediate price rises and improved milk contracts must be put in place by milk buyers, as struggling dairy farmers grow impatient.

The warning comes from the Dairy Coalition, the industry group formed to fight payment cuts to milk suppliers in the summer.

The coalition – made up of the National Farmers' Union (NFU), farming unions in Scotland and Wales, Farmers For Action, the Tenant Farmers' Association, Women's Farming Union and the Royal Association of British dairy Farmers – met this week and agreed its priorities were to ensure the delivery of a sustainable milk price and the rapid provision of improved contracts for farmers.

According to latest industry estimates, a break-even cost to produce milk is 32 pence per litre, yet milk prices achieved on farm are as low as 25p, and typical liquid prices are between 29p and 31p.

Industry estimates suggest milk production will be down by 7.3% this year as a result of the various pressures on-farm, including the difficult weather conditions.

NFU dairy board chairman Mansel Raymond said: "Delivery of the Dairy Code was a key success following the efforts of dairy farmers and the Coalition during the summer of 2012.

"However, farmers now expect action as a result of this agreement.

"We expect all milk buyers to amend contracts to ensure they are compliant with the Dairy Code and do it without delay.

"If farmers are to have confidence in the code as a mechanism to deliver better conditions and market returns, processors have to show they are committed to it."

Andrew Butler, acting regional director of the NFU in the South, said: "It's no wonder farmers are frustrated. Costs on-farm are increasing daily, milk prices are stubbornly refusing to keep up and, as a consequence, production is falling back.

"What farmers need now is confidence in the future – a sustainable milk price and real improvements to contracts in line with the contracts code will certainly help with this.

"It may take time to amend contracts, but Dairy UK (the processors' organisation) has been working with us on the code for over a year and processors have had the final approved text since October."

The Dairy Coalition agreed to press for a sustainable milk price which at least covered average cost of production and the immediate acceptance of the terms of the Dairy Industry Code of Best Practice on Contractual Relations, and called upon all processors and Dairy UK to focus on delivering its full implementation without delay.

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