Sir, – Key conference speakers at the excellent Semex conference in Glasgow last week, offered some inspiration on how to take dairy forward.

That included the need to grasp the initiative to increase collaboration, trust and efficiency in the dairy supply chain, via much more collaborative and agreed contract terms.

NFUS and its fellow UK farming unions are proud that our well considered evidence and lobbying has moved the Grocery Code Adjudicator and Defra to recognise the need for improved contracts in the dairy sector.

The sector faces many challenges – Brexit, global competition, labour and skills shortages, climate change, animal welfare, anti-dairy campaigns – and we will engage with all these from a positive, informed manner.

However, the forthcoming consultation on milk contracts offers the biggest opportunity in a generation to evolve the contractual relationships in the supply chain.

For those who doubt the huge relevance of contracts, it is sobering to reflect that 90% of a dairy farmers income is dependent on the market, which we can’t change. In a volatile and competitive market place, it is the contract terms that are crucial in determining the share of risk and reward, reaction to changing markets, supply and demand.

Contracts also determine price, volume, bonuses, penalties, and any variations, which to a great extent are currently imposed rather than agreed.

NFUS and our fellow unions fully acknowledge and accept that some in the processing and co-op sector have made good progress, but we are also aware that there remain contracts and terms that do not reflect a fair share of risk and reward, and maybe more significantly, undermine trust between farmers and processors.

Defra’s expected consultation on contracts will not impact on processors ability to react to changing markets, indeed it has great potential to enhance the UK dairy sectors ability to be reactive and innovative.

The voluntary code agreed and signed in 2012 by the farming unions, Dairy UK and the then minister, Jim Paice, reserved the government’s right to revisit the option of compulsory regulated contracts. The voluntary code has made progress, but not enough.

Scotland now has fewer than 900 dairy farmers, and while increased cow numbers and production is filling the gap, we are in danger of losing critical mass through lack of confidence, investment and attractiveness to the next generation of farmers and skilled staff.

For those who see their future in dairy in Scotland, we seek genuine dialogue between all players in the industry and government, to create contractual agreement frameworks that can be trusted by all in the sector, for the benefit of all in the sector.

John Smith,




(Chairman NFU Scotland Milk Committee)