It is understood that a number of individual milk processors in NI have put in a response to the Defra consultation on contracts in the dairy industry, including our two largest co-ops, Dale Farm and Lakeland Dairies.

Both made the point that co-ops are fundamentally different to a plcC business, so “a one-size-fits-all approach” to legislation around contracts will not work.

In addition, as well as being dominated by co-ops, the dairy industry in NI is also export-focused, unlike that in Britain which is reliant on the domestic market.

Dale Farm said it was fully supportive of having formal arrangements in place, while Lakeland highlighted that it was happy to give a written contract to any supplier that requested it

As a result, the co-ops (and also the UFU) argue that it should be up to devolved nations to decide whether to implement any potential legislative changes that might come from this UK-wide consultation.

In terms of contracts between farmers and processors, Dale Farm said it was fully supportive of having formal arrangements in place, while Lakeland highlighted that it was happy to give a written contract to any supplier that requested it.

Pricing mechanism

However, the main point of difference between the UFU and the co-ops is around the concept of including a pricing mechanism within a contract.

Both co-ops are understood to have expressed their strong opposition to this, pointing out that prices are currently set by farmer-led boards (so are fully transparent), and at all times the co-op pays out what it can afford based on market conditions.

If a rigid pricing mechanism was used, they argue this could lead to more volatile prices for farmers as it would remove the ‘discretion’ that the board has not to take prices to the floor (when markets are poor) and vice versa.

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