A NEW campaign to protect farmers and ensure they get the best price for their livestock has been launched by the Institute of Auctioneers and Appraisers in Scotland (IAAS).

The call comes on the back of what it claims the 'insidious use of closed-door deals' by the major buyers who are increasingly demanding direct contracts with primary producers, and in the case of cattle, often making further stipulations on maximum movements over the entire production cycle to shield such buyers from the 'transparency and honesty that can only be guaranteed in the livestock auction ring'.

These buyers many of whom are supplying UK supermarket chains, are making stipulations which amount to nothing more than a deliberate attempt to avoid price scrutiny in the ring, according to the Institute.

The campaign comes after a series of complaints from farmers who have found themselves short-changed by direct contracts, particularly at times when short-term market fluctuations have been avoided by the major buyers.

“Supermarkets are demanding more and more direct contracts at the very time when farmers need to ensure that they are genuinely receiving a fair price for their produce," said Scott Donaldson, IAAS president.

"This is a practise which puts the efficiency of the rural economy at risk and might even be deemed by the authorities to be anti-competitive. Access to a fair pricing regime, as delivered by the network of livestock markets that we represent, is the very cornerstone of fair farming practice. We want to work with supermarkets and valued stakeholders, but now is the time for this evasion on price to end.

“The insidious growth in the use of closed-door deals puts at risk the transparency and honesty that can only be guaranteed in the livestock auction ring.”

At a time of such uncertainty, when demand could fluctuate from one extreme to the other, IAAS says producers need to know that they can sell at any point, long keep, forward or finished, and be guaranteed a fair price, and only the auction system can offer this. Only the auction system can guarantee an outlet for livestock at any stage with the security of payment on the day. Cash flow in the current climate is a lifeline for many producers and may become increasingly important.

IAAS claims that at times of huge uncertainty for the rural economy, the ability to trade at a time of the farmers’ choosing, and in the clear knowledge that the price was transparently the best that could be delivered on the day, is more important than ever.

Mr Donaldson added: “We know that the undermining of rural livestock markets by directly contracted arrangements is a real threat to agricultural activity in some of the most remote and fragile areas of Scotland. Once rural markets close, they remove a vital part of the support network for viable agricultural activity, and such closures look to be irreversible.

“Direct contracts remove transparency from the system, preventing a public process of establishing a fair price as stock moves through the supply chain.”