Milk contracts should be NI-specific – UFU

Any future legislation on contracts between dairy farmers and processors should not be applied on a UK-wide basis, the Ulster Farmers’ Union (UFU) has said.

A public consultation launched by the UK government on compulsory written contracts in the dairy industry closed to responses on Tuesday.

“Results from this consultation process will need to be considered on a devolved basis, avoiding a ‘one-size-fits-all’ application, as the GB milk market is different to that here in NI,” the UFU response reads.

The farmer-owned co-operative structure of the NI dairy sector is much more focused on exports than in Britain, where most milk buyers are private companies that target the domestic market.

Survey

In a survey of 133 UFU members, 80% of respondents agreed that there was a need for trading relationships between producers and processors to be covered by a written contract.

The UFU also wants the NI dairy sector to move away from retrospective pricing, so that farmers know their monthly milk price in advance.

The union suggests that a pricing mechanism, such as a market indicator, should be used to create a “transparent pricing structure”.

However, the UFU response is careful to add that an “inflexible pricing formula” should not be “imposed” on the sector.

The UFU also argues that an agreed pricing mechanism could strengthen the hand of processors when selling products to retailers.

“A common complaint [...] is that processors are ‘weak sellers’ and it is the producer who pays regardless of the wider milk price. An agreed pricing mechanism would aim to avoid this happening,” the response reads.