Arla Launches New Direct Milk Supply Contract19 February 2013
UK – Dairy cooperative, Arla Foods UK plc, has launched its first direct milk supply contract.
The new ‘Arla Direct’ contract comes as part of a stream of dairy industry changes to regulate processors and protect producers and is believed to be the first milk contract fully compliant with the dairy code of best practice on contractual relationships.
Offering greater flexibility inline with new market codes of practice, Arla Direct has received positive reactions from farmers and the NFU.
With a standard litre price of 30.02ppl, Arla Direct aims to offer farmers security. The contract includes compositional and liquid variations, a volume bonus for larger producers, seasonality options and a 12 month notice period including a three month trigger, as set out by the code.
Speaking on the launch, Arla’s head of milk and member services, Ash Amirahmadi said: “We believe this contract offers dairy farmers in England, Scotland and Wales, who aren’t already supplying Arla, a long-term premium milk price and the security of supplying milk to a farmer owned cooperative that is investing in the future of the industry.”
“Since its launch in September, there has been plenty of debate around the Code and Arla is fulfilling its commitments by introducing what we believe is the first fully compliant milk supply contract.” added Mr Amirahmadi.
Two contracts are now available from Arla: the Arla direct contract and the Arla Foods Milk Partnership contract (AFMP).
It is the AFMP contract that should be chosen by farmers aspiring to be member of Arla Foods Amba in the future.
Commenting on the contract, National Farmers Union Chairman, Mansel Raymond said: “This is an important and positive step for Arla Amba’s UK dairy business. It is vital that the Arla shows strong leadership and a commitment to equitable contractual relations with farmers suppliers.”
“Within the Dairy Contract Code, there are specific exemptions for potential and existing co-operative members, for instance the right to terminate a contract on three months’ notice does not apply,” added Mr Raymond.
Much currently rests on discussions between farmer representatives in Arla Milk Link and Arla Foods Milk Partnership this spring, said Mr Raymond.
The Arla Direct launch is part of a national recruitment push to secure the supply of a further 500 million litres of UK milk.
Processing approximately 3.2 billion litres of milk a year and with a turnover of approximately £2bn, Arla is the UK’s largest dairy company. Brands including Cravendale, Lurpak and Anchor are owned by Arla Food UK plc.