29 June 2011

3 minute read

Europe

A report written by Northern Irish MEP Jim Nicholson calls for mandatory contracts for all member states that set out the milk price payable, how the price is calculated and volume specifications. It adds that all terms are to be freely negotiated between parties.

The NFU has said the move would be a major step towards re-balancing power in the dairy supply chain.

“When ten dairy farmers are going out of business every week, as is the case in the UK, it is clear something has to be done," said NFU dairy board chairman Mansel Raymond.

“Current milk contracts offer no certainty or clarity to farmers. The price of milk can vary from one month to the next leaving farmers with no security of what they’ll be paid for their milk.

“Too many farmers are locked into a contract with long notice periods and no ability to alter the situation – this proposal will allow for better negotiation of contract terms both before signing and during the contract term.

“Importantly, termination clauses also make up part of the plans. We hope these proposals will help redress the power balance between producers and processors to give dairy farmers longer term certainty over their milk price, volume and contract length.

“In another positive move, the MEP proposal also gives Producer Organisations the ability to negotiate a higher volume of milk for their members – up to 40 per cent of national production. There is also guidance on how to set up Producer Organisations and Interbranch Organisations to benefit the sector.”

The report comes in response to recommendations made by the European Commission’s High Level Group on dairy. It will be put to a vote by all MEPs in the autumn. The European Parliament and agriculture ministers must agree on the final text before it becomes law.

The next stage of discussions with the European Council of ministers will be vital to the progress of this important proposal.

NFU Scotland Vice President Allan Bowie said: “We remain committed to developing compulsory, effective milk contracts underpinned by effective producer negotiation powers and the backing by MEPs for Jim Nicholson’s report takes us one step closer to delivering on our policy.

“The dairy package produced in Europe promises much and we have been lobbying intensively to ensure that it delivers real benefits to grass roots dairy farmers. Unfortunately, those seeking to weaken the package have included Defra and the time is right for Westminster to stop dragging its heels and look at the positives – such as mandatory contracts and stronger producer organisations - that the dairy package can provide.

“Hiding behind voluntary contracts and toothless codes of practice, as suggested by Defra, will not deliver the sea change in the dairy industry that dairy farmers clearly want.

“Recent producer meetings held by NFU Scotland received unanimous backing for contractual changes between dairy farmers and milk buyers. That mirrors the desire shown in Europe for compulsory milk contracts that include clauses on market-related prices and pricing mechanisms, milk volumes, delivery schedules and contract length.

“There is a genuine momentum for change in the dairy sector, both at home and in Europe. We look forward to our ongoing dialogue with other parts of the UK supply chain and in Brussels to identify how the position of producers in that chain can be more fairly represented.”

As part of its high profile ‘Back Dairy’ campaign, the NFU has met with a number of MPs and Defra staff over recent weeks, calling for support for the Commission.

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