DAIRY FARMING'S enemies are numerous, and increasingly powerful – but instead of presenting a united face to the world, the sector regularly shoots itself in the foot by obsessing over the rancorous internal divisions between milk producers and processors over pricing and contracts.

Speaking at this week's Semex conference in Glasgow, dairy sector analyst Chris Walkland called into question the logic of the current drive towards compulsory milk supply contracts, saying that it was a bad idea being pursued for the wrong reasons, when everyone's energy would be much better employed dealing with the external threats facing dairying as a whole.

Key to Mr Walkland's argument was his 'All Index Average', which pulled together information from a wide variety of dairy income streams and global, European and UK market formulas, dating back to January 2015, to produce what he described as a reliable measure of whether the current discretionary pricing system was delivering a fair deal to producers.

"The fact is, most of the time, your price is within 2% of where I think it should be – and all bar once since 2016 it has been within 3%," claimed Mr Walkland. "We have vegans, Brexit, the Asda/Sainsbury's merger – all of these things could affect dairy returns by 20%, but instead we are worrying about that 2% variation."

"It is crap to say that the market lacks transparency," he continued. "What these people are saying is that ' We don't understand the market'. Is your contract so bad that you need legislation to make it right? Will you be better off? A few bad contracts for the minority are not the enemy of the majority. Volatility is the enemy. Everyone in this room, in this industry, is an ally," he insisted.

Mr Walkland conceded that the milk market was tough, but not 'dysfunctional', and rather than seeking legislation, said that ba fresh effort to foster common purpose along the supply chain ­– 'to grow the overall cake rather than fight over its division' – could sort out contractual issues without recourse to new laws.

"Beware of replacing something that isn't broken with something that doesn't work."

However, Defra farm minister George Eustice used his Semex speech to reiterate his commitment to a dairy contracts consultation, describing dairy farmers as 'captives' of the current system, obliged to take the price they were offered.

“They either need the ability to walk away from a processor or if you are to commit for the long term, they need to commit to how that price is calculated.

“We are not asking for a guarantee on prices right away, just a guarantee on the way in which those prices are calculated,” he explained. “If it is applied universally to everyone, whether they are a co-operative or a private company, it means that the incentive for processors to behave in a weak or craven way is diminishing, which is the right way to approach this issue.”

Mr Eustice added that an element of the reform he was seeking would be much shorter notice periods – as little as four weeks – for dairy farmers to jump ship if they were unsatisfied with the performance of their processor.