UK: Dairy processors, farmers formalise deal on code of practice

By Michelle Russell | 3 September 2012

UK dairy industry agree deal on code of practice

NFU dairy board chairman Mansel Raymond said the code is the culmination of “many months of hard work by all parties”

UK dairy processors and farmers have formally agreed a deal on a code of practice to govern relations in the sector.

A tentative "heads of agreement" on a voluntary code of practice was agreed in July after talks with the UK government. The discussions were held amid anger from farmers at cuts to the price of milk from the UK's largest processors.

Formal agreement between Dairy UK, the NFU and the NFUS on the voluntary code of best practice on contractual relationships between milk buyers and dairy farmers was confirmed today (3 September).

"The code should also enable dairy farmers and processors to build relationships of trust and mutual understanding," said Dairy UK director general Jim Begg. "Only on this basis can the industry create the added value that will protect it from price volatility. We would hope that the spirit of co-operation that has resulted in this agreement can be carried forward into the future."

NFU dairy board chairman Mansel Raymond said the code is the culmination of "many months of hard work by all parties".

"Getting this code agreed is the right footing to move forward with the industry on a robust and ambitious strategy for the dairy sector, which is a priority for us," he said.

The code means farmers must receive at least 30 days notice of a change to the price they get for milk. Under the agreement, retrospective changes to price will no longer be acceptable.

Should a processor wish to "use their discretion" to set farmgate milk prices, the NFU said, they must hold talks with farmers and commit to maintain prices within "mutually-agreed parameters".

If a farmer disagrees with a price change, he has the right to quit the contract with three months' notice. Further conditions include the ability for farmers to supply more than one processor.

Final implementation of the voluntary code of practice is subject to legal approval.

Show the press release

HISTORIC AGREEMENT ON VOLUNTARY CODE

Dairy UK, the NFU and the NFUS have reached agreement on a voluntary code of best practice on contractual relationships between milk buyers and dairy farmers.

Commenting on the landmark agreement Dairy UK Director General Jim Begg said: "I am delighted that Dairy UK, on behalf of its members, has been able to reach agreement with the farming unions on the voluntary code. This important initiative builds upon existing arrangements, which give farmers and processors security in business relationships, whilst adding additional safeguards that will assure farmers that their contracts are not putting them at a disadvantage in the marketplace.

"The code should also enable dairy farmers and processors to build relationships of trust and mutual understanding. Only on this basis can the industry create the added value that will protect it from price volatility. We would hope that the spirit of co-operation that has resulted in this agreement can be carried forward into the future."

Mansel Raymond NFU Dairy Board Chairman commented: "This code is the culmination of many months of hard work by all parties. The NFU has championed the cause of improving dairy contracts and we are now very pleased to be launching this code of best practice. Farmers need equitable and trusting relationships with their milk buyers and this can only be achieved by putting in place fair and transparent milk supply contracts.

"In line with the Coalition's 10 point plan we will be working with farmers and processors to see the many beneficial terms of this code translated into beneficial terms in milk supply contracts. Getting this code agreed is the right footing to move forward with the industry on a robust and ambitious strategy for the dairy sector, which is a priority for us."

Rory Christie, Vice Chairman of the NFUS Milk Committee went on to comment: "This code of best practice is highly significant, it is about British dairy farmers working together with British dairy processors to improve the industry. Individually farmers can be weak, but the NFUS believe that dairy farmers working together can achieve a great deal and we will be continuing this collaborative effort as we work to ensure the code is implemented in the best way for our dairy members.

"We're pleased to have taken this project across the line and thank all concerned."

Original source: Dairy UK, NFU, NFUS

Sectors: Dairy, Private label