NFU plots new contract to protect UK dairy farmers

By Chris Mercer

- Last updated on GMT

Related tags Dairy farmers Supermarket

An independent supplier contract that aims to better protect dairy
farmers in their dealings with processors and retailers is being
devised by the National Farmers' Union.

The contract is still in the early stages of development, but when complete should provide a blueprint for farmers to get a fairer supply deal, Gwyn Jones, head of the union's Dairy Board, told​ Low farmgate milk prices have been thrust into the public spotlight in recent weeks, after the Competition Commission said it would investigate the situation as part of its grocery supply chain probe. Jones said: "We hope that dairy farmers whoever they supply will get together as groups and councils and put in place the parts [of the contract] that they see as relevant to them." ​ Issues being considered include stopping retrospective milk price cuts by processors, reducing penalties imposed on suppliers and allowing larger producers more freedom to supply different firms. Fears have heightened that the current industry climate is unsustainable. Industry figures show 1,000 dairy farmers have left the sector over the last year, and among them are efficient, large-scale producers. Jones said weak contracts for dairy farmers were harming the whole sector. He called many current supply contracts "open-ended documents"​ and said it was unfair to expect dairy farmers to sign. "We need to persuade farmers that if they did work together they would have real power to put in place the missing link in the chain, which is the contract that dairy farmers have." ​The NFU hopes to have its independent contract sorted by late this year. Processing firms were unlikely to play a role in the initiative. Complaints about mistreatment of dairy farmers in the supply chain have been difficult to substantiate. The Competition Commission said as part of its grocery supply chain investigation recently: Many suppliers have been reluctant to provide us with details of specific instances to illustrate the general concerns that have been raised due to concerns of possible retaliation by grocery retailers. In the absence of more specific examples, we may find it difficult to come to any conclusion.​ Dairy processors, including Dairy Crest, Arla Foods and Robert Wiseman, have repeatedly denied mistreating suppliers, as have all the major supermarkets. Extra costs for farmers, the processors say, merely reflect intense cost pressures on their own business. The whole UK dairy industry has faced a battle to raise earnings recently.

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