NFU Cymru Makes Commitment At Welsh Dairy Event
WALES, UK - National Farmers Union (NFU) Cymru is committed to working with the rest of the supply chain to achieve fair and equitable dairy contracts. However, the Union will not shy away from calling for government intervention to ensure its members get a fairer deal.
19 October 2011
3 minute read
NFU Cymru President, Ed Bailey, will make that commitment at this year’s Welsh Dairy Event and urge processors to grasp the nettle on a voluntary code of best contractual practice.
Mr Bailey said: “It is simply not an option for farmers to go on seeing farm gate milk prices, which bear no relation to the value of dairy products or farm costs. Milk buyers either need to take responsibility for their suppliers and pay a price linked to costs of production, market linked formulas; or the market needs to function to allow competition to have a real and timely effect on farm gate milk prices. Either way the status quo cannot be considered a viable option for future team working.”
NFU Cymru Milk Board Chairman, Maurice Jones added: “The situation has not improved in recent months as we would have expected. We’ve seen a bit of upward movement but farmers are expecting a lot more. The European average farm gate milk price is 31ppl, and the two market indicators are both over 33ppl. Yet, the average UK farm-gate price, at just over 27.5ppl, still languishes pretty much at the bottom."
“These statistics speak for themselves. Roughly speaking, in Wales we are seeing about 1.6 billion litres of milk being sold on average four ppl below its worth or below its cost to produce; that’s £65 million per year that’s lost to the rural economy or roughly £34,000 per farm. It’s no wonder investment is so hard to manage or to justify."
“We also need the industry to move away from buyers having the discretion to make fundamental changes to terms, such as price and pricing schedules, without proper consultation or transparency.”
Mr Jones continued: “However, while headline price rises seem significant, changes to pricing schedules by some companies mean many farmers will fail to realise headline prices unless they hit new and existing top bands for quality or constituents. So, while I commend all buyers who have offered unconditional and transparent increases to their base price, my message to processors is farmers deserve balanced contracts and now is the time to offer them."
“It simply isn’t acceptable for key conditions like a farmer’s pricing schedule to be changed, without due consultation and agreement, or without releasing them from the notice period of the contract. As things stand, farmers have no means of protest and cannot go to other buyers when their own makes adverse changes to key contractual terms and conditions. This practice is known as buyers’ discretion, I call it unfair.”
“We face a tough autumn and winter. Forage stocks have been depleted following a dry spring and feed, bedding and energy costs are all high. With market indicators well above 32ppl and production costs in excess of 31ppl, I know that milk producers are expecting and deserve a lot more.”
TheCattleSite News Desk
