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DEFRA is to publish a UK-wide public consultation on mandatory contracts in the dairy sector later this year, with the outcome expected to form part of a government report on post-Brexit agricultural policy.
The UK’s four farming unions are supportive of introducing regulation on dairy contracts and have indicated that they want it to be used so that milk prices paid to farmers are more insulated from volatility in dairy markets.
However, Dairy UK, the trade body which represents dairy processors, argues that fixed milk prices, or milk prices that are based on formulas, will mean processors are less able to respond to market developments. As a result, overall prices paid to farmers will be lower on average.
Speaking at an Ulster Farmers’ Union (UFU) event near Derry last week, UFU senior policy officer Chris Osborne suggested that mandatory contracts could be used to improve transparency around how dairy processors set milk prices.
“We are getting our ducks in a row and discussing what implications this could have on NI specifically,” he told UFU members.
However, at the same event, Lakeland Dairies chief Michael Hanley questioned why more transparency was needed with milk pricing in NI, as most local dairy processors are farmer owned co-ops.
He pointed out that Lakeland’s milk price is set by the co-op’s board, which is elected by farmer shareholders, and all staff within the dairy co-op ultimately answer to that board.
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