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Farmers Expect Action on Improved Contracts, Greater Returns

13 December 2012
National Farmers Union

UK - Immediate price rises and improved milk contracts must be put in place by milk buyers, as struggling dairy farmers grow impatient, the Dairy Coalition warned yesterday (12 December).

The coalition, the NFU, NFU Cymru, NFU Scotland, FFA, TFA, WFU and the RABDF, met this week and agreed its priorities were to ensure the delivery of a sustainable milk price and the rapid delivery of improved contracts for farmers.

According to latest industry estimates, a break-even cost to produce milk is 32 pence per litre (ppl), yet milk prices achieved on farm are as low as 25ppl, and typical liquid prices are between 29ppl and 31ppl. DairyCo estimates suggest milk production will be down by 7.3 per cent this year as a result of the various pressures on-farm including the difficult weather conditions.

NFU dairy board chairman Mansel Raymond said: “Delivery of the code was a key success following the efforts of dairy farmers and the coalition during the summer of 2012. However, farmers now expect action as a result of this agreement. We expect all milk buyers to amend contracts to ensure they are compliant with the code and do it without delay. If farmers are to have confidence in the code as a mechanism to deliver better conditions and market returns, processors have to show they are committed to it. In the short term, we expect the default answer of milk buyers to be yes we will honour the code, rather than no we’ve not had time to amend your contract.

Gary Mitchell, NFUS dairy board chairman, said: “It’s no wonder farmers are frustrated. Costs on-farm are increasing daily, milk prices are stubbornly refusing to keep up and, as a consequence, production is falling back. What farmers need now is confidence in the future; a sustainable milk price and real improvements to contracts in line with the contracts code will certainly help with this. It may take time to amend contracts, but Dairy UK has been working with us on the code for over a year and processors have had the final approved text since October.”

The coalition agreed to press for a sustainable milk price which at least covers average cost of production and the immediate acceptance of the terms of the ‘Dairy Industry Code of best Practice on Contractual Relations’ and called upon all processors and Dairy UK to focus on delivering its full implementation without delay.

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