The long-awaited consultation on contractual relationships in the dairy sector has finally been published by Defra.Running for 12 weeks to midnight on 15 September 2020, the consultation applies UK-wide, and seeks views on whether government should legislate for the introduction of mandatory written contracts between producers and purchasers of milk.
The long-awaited consultation on contractual relationships in the dairy sector has finally been published by Defra.
Running for 12 weeks to midnight on 15 September 2020, the consultation applies UK-wide, and seeks views on whether government should legislate for the introduction of mandatory written contracts between producers and purchasers of milk.
It follows on from a voluntary code of best practice which was agreed by industry in 2012, which did see good uptake, but has generally not had the desired impact in terms of improving supply chain relations.
Since then, farming unions have pushed for government to ensure there is fairness in the supply chain, and less volatile prices. However, dairy processors have warned of unintended consequences if they are forced to offer fixed prices, and are unable to respond to sudden market changes, such as increased demand.
It also questions if termination clauses are necessary
The consultation asks for views across a range of issues, including whether legislation is required, and if so, should there be a price calculation mechanism, fixed volumes specified, and a minimum duration of contract specified.
It also questions if termination clauses are necessary, whether all terms and conditions relating to payments and deductions should be included, and if producers should be able to sell to more than one buyer.
Commenting, UFU dairy chair Mervyn Gordon described the consultation as a “once-in-a-generation opportunity” to look at how milk is priced in NI.
“Dairy farmers need a more sustainable future and dairy contracts are at the heart of this. Specifically, we want to see a contract which delivers fairness for farmers and has an equitable balancing of risk between farmers and processors,” he said.
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