Dairy Voluntary Code of Practice Agreed

UK - An agreement was reached yesterday on the principles of the voluntary code of practice that will oversee the relationship between farmers and milk processors. Representatives from farmers and milk processors met for more than three hours at the Royal Welsh show to agree on the code alongside minister for farming, Jim Paice MP.

24 July 2012

2 minute read

Europe

The Code means that in future, contracts between farmers and dairy processors will be freely negotiated, fairer and more transparent.

Individual farmers will negotiate contracts covering issues including pricing, notice periods and farmers will have the ability to leave contracts more easily if they are unhappy with the price they receive.

Speaking at the Royal Welsh Show where the agreement was reached, Farming Minister Jim Paice said: “I welcome the commitment all sides have shown to reaching an agreement.

“The Government will continue to work with all parts of the industry to secure its long-term future, including promoting farmers working together in Producer Organisations.”

On Wednesday, Defra Ministers will be meeting retailers individually to talk about increasing dairy industry sustainability through greater sourcing and promotion of British dairy products.

NFU President Peter Kendall said that while the announcement gave some hope for the long term it did not solve the dairy farming issues of today.

“This agreement will give us the architecture we need to make sure that we don’t end up with the same dysfunctional markets that are responsible for the dairy crisis we have today,” he said.

The code stipulates that dairy farmers must receive at least 30 days’ notice of a price change and retrospective price adjustments are no longer acceptable.

The code also puts in place conditions that must be met, where a purchaser wishes to use their discretion to set farm gate milk prices.

These include a commitment to engage with farmers and their representatives, a commitment to maintain prices within mutually agreed parameters and where a farmer disagrees with a price change, the right of the producer to exit the contract with three months’ notice.

Further conditions include the ability of farmers to supply more than one processor, where their primary milk buyer seeks to cap their production and the right to automatic contractual release for producers from insolvent purchasers.

Details on the code are due to be finalised by the end of August.