UK dairy processors are being urged to implement the Dairy Industry Code of Best Practice on Contractual Relationships and increase their farm gate milk prices – or face being named and shamed.
The Code of Best Practice was agreed on by the National Farmers Union (NFU), NFU Scotland (NFUS), and Dairy UK in September 2012 following a summer of high-profile, farmer-led action against dairy processors.
It was designed to give dairy farmers assurances that their contracts are not putting them at a disadvantage in the marketplace, and provide greater transparency.
Dairy processors and Dairy UK have pinpointed the end of March 2013 as a realistic deadline to improve milk contracts.
A coalition of farmer representatives - comprised of the NFU, NFUS, NFU Cymru, Farmers for Action (FFA), the Tenant Farmers Association (TFA), the Women’s Food and Farming Union (WFU), and the Royal Association of British Dairy Farmers (RABDF) – would, however, like to see improvements sooner.
It has vowed to make non-compliance with the Code “very public.”
Farmers still producing at a loss
NFU chief dairy adviser Robert Newbery told DairyReporter.com that that despite milk price improvements in 2012, too many dairy farmers are still operating at a loss.
“What we can say for sure today is that far too many producers are operating at a loss, when you factor all costs of production,” said Newbery.
“The dairy farming sector needs to be able to invest in infrastructure and capital to improve efficiency and grow production for the future. The current feed price to milk price ratio is making this impossible.”
He added that the farmer coalition is pushing for full and immediate implementation of the Code of Best Practice.
“The NFU is speaking to processors all the time. We are pushing for full implementation of the Dairy Industry Code of Best Practice for Contractual Relations, so that farmers have more equitable relationships with milk buyers and the market can start to return better prices to allow for investment.”
"Our dialogue with processors and retailers is about getting price transparent and determinable formula in place, so that farmers can have the confidence to invest in future.”
Cost of production still on the rise
The Code of Best Practice was drawn up following months of pressure on UK-based dairy processors by British dairy farmers.
Campaign group Farmers for Action (FFA) organised demonstrations and blockades at processing plants across the UK in protest to milk price reductions earlier in 2012. Processors including Arla Foods, Muller Wiseman Dairies and Dairy Crest eventually caved in to the pressure and postponed their planned price cuts.
Despite its achievements last year, FFA chairman David Handley has called for further milk price increases to meet the growing cost of production.
“Despite all of our efforts, farm gate milk prices for deliveries in January are typically only 1ppl to 2ppl higher than in April 2012. Since then, however, costs of production have risen by 3ppl to 4ppl. Farmers need to see improving dairy market conditions translated into farm gate milk price rises,” said Handley.