MILK BUYERS’ power to set and modify the price paid to producers is now under national scrutiny, with the launch of a 12-week consultation inviting everyone in the dairy supply chain to speak up about the ‘unfair practices’ that affect them.

In an uncommon show of unity, the UK Government initiative is being conducted in tandem with the devolved administrations in Scotland, Wales and Northern Ireland, which have all acknowledged the need for a rebalancing of price-setting power between cow and chiller shelf.

But it has been a long time coming. It was back in 2016 that evidence gathered by the Groceries Code Adjudicator highlighted how unfair practices had persisted in the dairy industry, and raised the prospect of a consultation on new regulations to strengthen fairness and transparency.

One of the key proposals now up for discussion is the possible introduction of a mandatory pricing mechanism within all contracts between dairy farmers and processors, to ensure the price paid for milk produced by the farmer is formally agreed within the contract, and that contract negotiations take place in a clear and transparent way.

UK farming minister Victoria Prentis said: “It is absolutely vital that our dairy farmers are paid fairly for their high quality produce and I am committed to cracking down on any unfair practices within the UK dairy industry.

“I welcome all views to this consultation to determine how best we can guarantee fairness across the supply chain. This will help the industry continue its vital role in feeding the nation and ensure our dairy farmers can continue to be competitive in the future.”

Scottish rural economy secretary, Fergus Ewing, said: “I encourage all dairy farmers, processors and their representatives to take part in this consultation and ensure that their voices are heard on this matter.

“Milk prices can vary and are often changed at short notice for a variety of reasons which can cause major issues for farmers in Scotland and across the UK. It is vital that we look at any opportunity to address any potential imbalance that exists between buyers and producers and bring our supply chains closer together.”

NFU Scotland urged dairy farmers to engage with the consultation and have their say in 'shaping a more effective dairy supply chain'.

Milk committee chair Gary Mitchell said: “This consultation could provide a pathway to a future for a dairy sector that is more resilient and innovative, something that is paramount at a time where we are moving out of a global pandemic, through the EU exit implementation period and significant changes in farm support. A rebalance of risk and power in the dairy supply chain would offer stabilisation in the face of increased risk and volatility in markets. This is of fundamental importance to dairy farmers and to the entire supply chain, as the vast majority of dairy farmers income comes via the Milk Cheque and not from farm support."

“There is great diversity in our supply chain and farmer base, with a range of contractual arrangements that are varying in favourability and fairness. However, most milk contracts in their current form do not create mutually balanced business relationships between buyers and sellers. Indeed, rights and obligations are often heavily biased in favour of buyers. The efforts to address the issues such as the Voluntary Code of Practice, whilst being very welcome, have not served to achieve increased transparency or fairness. In 2018, the Grocery Code Adjudicator review found very clearly that there was an uneven distribution of power within the dairy sector and changes need to be made now, more than ever.

“NFUS recognise that the relationship between farmers and processors has improved in the last few years. Co-op and Producer Organisation structures are leading to better co-operation and putting farmers in a stronger position. We do not want to fix things which are not broken, but we also need to address the many examples where farmers are in a desperately poor position as a result of their milk contract and relationship with buyers.

“We see that there is a huge opportunity to change the structure of the dairy industry to make it more sustainable, progressive and improve the way farmers and processors work together for common goals. The contract sits at the heart of the future of the British dairy sector and we are pleased that Government is consulting on this. We urge any dairy farmers to get involved in the discussion and feedback to the consultation either directly or via your farming union. This is a once in a generation opportunity to gain some real change and secure the future of the British Dairy Sector.

“NFUS continues to work very closely with the other UK farming Unions who all believe this to be of great significance. We will be holding virtual meetings on the week beginning 27 July, to allow Scotland’s dairy farmers to play a full and constructive role in this consultation. NFUS also welcomes any requests for discussions, meetings, in groups or one to one. This is potentially of significant importance to the dairy and other sectors and supply chains’.

To view the consultation in full visit: