Milk Contracts Should Allow Two Month Get Out

UK - The Tenant Farmers Association is calling for dairy farmers to have a mandatory two month get-out clause from milk supply contracts.
calendar icon 6 July 2012
clock icon 2 minute read

Recent, sharp price reductions announced by dairy processors have left many dairy farmers imprisoned by huge losses as they are normally unable to serve notice on their milk purchasers for at least 12 months.

TFA National Vice-Chairman Stephen Wyrill said "The situation is totally unacceptable. Dairy farmers should have the ability of cancelling contracts with only two months notice. We understand that the processors might be prepared to offer a six-month notice period which is still far too long”.

“The mantra of recent years has been all about building relationships within the supply chain but it is clear that when push comes to shove retailers and processors, with dominant power in the marketplace, have little regard for the primary producer and it all comes down to price. This is not in the long-term interests of consumers. Dairy farmers are already being forced to give up milking at an alarming rate and the current situation, if allowed to continue, will only cause this to accelerate," said Mr Wyrill.

"If processors are not prepared to move then the Government must step in to require them to move. If rigging interest rates for corporate gain is wrong in the banking sector, rigging milk prices for corporate gain must also be wrong," said Mr Wyrill.

"There must also be greater scrutiny upon how the operators in the supply chain go about their daily business. There is little point in reducing the notice periods if we do not also ensure that there is no collusion between processors and retailers in setting prices which must be a job for the soon-to-be appointed Groceries Code Adjudicator," said Mr Wyrill.

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