Speaking after a meeting between the NFUS and First Milk on Tuesday, NFU milk policy manager George Jamieson again called for milk contracts to be introduced between farmers and processors.

“Farmers are carrying too much of the risk currently,” according to George. “There is an imbalance of power in the industry and it is the farmer that is suffering. Contracts won’t get rid of volatility in the market but it might make it easier to manage.”

The move comes after Defra accepted a recommendation from the Grocery Code Adjudicator that dairy farmers are disadvantaged by an imbalance of power in the dairy supply chain.

“Genuine collaboration is needed by the industry and we are willing to look at it with an open mind, whether it is contracts or a mandatory code of practice for processors,” said George.

“The weakness of the voluntary code of practice wasn’t in the policies, it was in the fact that it was voluntary so processors didn’t implement it.

“We are not saying that contracts have to be rigid or inflexible and I think there is a lack of understanding as to what a contract can offer. There could be a pricing mechanism installed that could be flexible.”

Positive outlook

The outlook for dairy farmers for the next few months is positive according to George: “All the market indicators are there to suggest that prices will be strong for the next three months. Commodity prices are quietly rising and there is no reason that we shouldn’t hit a milk price of 30ppl in the next few months, there is no reason why it shouldn’t be that now.”