Unions Combine Forces on Milk Price Transparency

UK - Representatives of the NFU, NFU Cymru and NFUS have met to discuss challenges facing dairy farmers and in particular the impact of consistently disappointing farmgate milk prices on farmers profitability.
calendar icon 30 June 2011
clock icon 2 minute read

Following the development by the NFUS of a commodity linked milk price formula, the NFU has congratulated their Scottish colleagues for taking the debate about milk price and contractual terms to the next phase, by coming forward with an example contract price formula.

The NFUS, who devised the formula in consultation with DairyCo, have used historical data to highlight the gap between farm gate milk prices over a ten year period and the potential true value of the milk according to the market indicators, MCVE and AMPE.

Speaking after last week’s meeting, Mansel Raymond, NFU dairy board chairman, said: “What the NFU has done up until this point, is to highlight the significant shortcomings in contracts that tie farmers into lengthy notice periods, with little or no certainty over price. What the NFUS has gone on to do is bring the whole issue over lack of price transparency in dairy contracts into focus, by highlighting the shortfall in producer returns, relative to the value of the milk farmers’ supply in the commodity markets.

“We believe there is still significant scope for improving the contractual terms and specifically for transparency and certainty as to the price farmers receive, supplying milk to dairy processors in the UK. The Co-op retail group is the latest retailer to come to the market with a proposed contract for dedicated liquid supply, which pays a premium for complying with key conditions. The challenge ahead for us is to ensure that every farmer in Great Britain has access to a milk contract with certainty that their farmgate milk price will be calculated in a fair, equitable and transparent manner.

“Going forward we intend to meet key stakeholders in the supply chain to call for transparent contractual terms to be offered to farmers supplying into other dairy category markets such as cheese, to pave the way for constructive negotiations between dairy companies and farmer representatives or dairy co-operatives and their various customers.

“With the Commission’s proposals on milk contracts gathering significant momentum, following the positive vote for compulsory contracts with price determination, voted through by MEPs on Monday, we are confident we will get to where we need to be. The supply chain now has the opportunity to work with us to achieve fair trading conditions voluntarily in the short term.”

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