By NFU Scotland policy manager George Jamieson

THE FORTHCOMING Government consultation on contractual change within the dairy sector must be viewed as a huge opportunity for debate and I urge every dairy farmer in Scotland to engage with the process.

All with an interest in dairy should get to next week’s must-attend meetings in Kinross, Thainstone, Castle Douglas and Renfrew.

Historically, the dairy industry has faced more major political and economic interventions in half-a-century than any other sector.

The lengthy list includes the introduction and demise of milk quotas, deregulation of milk marketing boards, reduced direct and intervention support, globalisation, volatility, increasingly powerful retailers, the financial crash in 2007, the Russian import ban, the 2012 EU dairy package, market failure in 2015 and now Brexit.

All turned Scotland’s dairy farmers into hamsters, forced to run ever harder on their wheel. Low and erratic margins have seen them face increasing pressure to invest, expand, or give up. Dairy processors also face thin margins, competing for trade with powerful retailer and end users, themselves in a hugely competitive and evolving sector.

The reality is that, while all players in the dairy supply chain are under pressure, there is an acceptance that the primary producers occupy a weak position in the supply chain.

The EU Commission first acknowledged this reality in 2012, when it recognised the need for more effective contracts, producer representation and more effective collaboration across the entire dairy supply chain.

The UK introduced a voluntary code of practice on dairy contracts but in 2016, the UK Grocery Supply Chain Adjudicator acknowledged that there was evidence of poor contractual relations in the dairy sector and that the voluntary Code was not effective in addressing this.

The UK Government has committed to consult on their proposal to introduce legislation to instigate contractual reform in the dairy sector. This is where Scotland’s dairy farmers have their chance to influence.

NFU Scotland and our fellow unions will hold four meetings in Scotland in July, recognising that this government initiative has the potential to be the most significant and meaningful intervention for a generation.

We are committed to work with all players in the dairy (and other) sectors to enhance contractual relations which deliver agreements that are based, not on the power to impose, but on fair outcomes for all in the supply chain.

The dairy sector needs more effective contracts to address the key issues of price transmission, volume management, and exclusivity to name three major opportunities.

This will not resolve volatility nor can we buck the global market, but we can introduce agreements which offer more security for producers and processors, based on intelligent collaboration.

Based on well considered contracts, there is an opportunity for farmer collaboration and effective representation to maximise the benefits of legislation on contracts and to engage professionally with milk buyers in a positive, progressive way.

Next week, we want to discuss with all players the potential presented in the Government proposals to inspire innovation, trust and growth for all.

The forthcoming seminars, organised by NFU Scotland, will feature contributions from AHDB, Scottish Government and NFU.

  • Wednesday, July 3 –11am to 1pm: Green Hotel, Kinross;
  • Wednesday, July 3 – 7pm to 9pm: Glen Garioch Room, Thainstone;
  • Thursday, July 4 –11am to 1pm: Ernespie House Hotel, Castle Douglas;
  • Thursday, July 4 – 7pm to 9pm: Normandy Hotel, Inchinnan Road, Renfrew.

Dairy farmers wanting to attend are asked to call 0131 472 4000 or Email: info@nfus.org.uk to book a place.