As the nation’s top dairy cows, heifers and calves were paraded at the Royal Bath & West Showground yesterday, the ink was drying on the long-awaited dairy code of practice.
The 7,000 farmers at the show said they were putting their faith in the efforts of The Dairy Coalition and hoped the code would ensure a balance in contracts between farmers and the dairies in future.
Rob Harrison, chairman of the South West Dairy Board, said: “Things are looking a lot better for dairy farmers than they were, and we now have a real opportunity to put the industry on a sustainable footing for the future.”
The code, which received final approval yesterday from industry leaders, sets out to protect producers from sudden price cuts for milk and, while acknowledging its voluntary nature, encourages all farmers and buyers to follow the code.
Dairy UK director general Jim Begg said it should give dairy farmers confidence in their contractual arrangements while avoiding regulation of farm contracts, “which nobody wanted”.
Under the guidelines to “minimum good practice”, contracts must clearly lay out a price or pricing mechanism that is either negotiated and agreed or is at the buyer’s discretion.
Either way, the farmer must be sure at any point in time of the value of the milk. Purchasers with more than 250 producers should offer two or more pricing options to accommodate preferences for risk or security.
The most significant hope for Britain’s 11,000 dairy farmers was that they would be protected from spontaneous price cuts. Robert Wiseman, for example, announced its price cuts of 1.7ppl on June 29, effective from August 1. However, the code only goes as far as requiring a 30-day notice period, although it blocks any retrospective calculation.
Any other changes to prices, either negotiated or determined by the buyer, will be set according to individual contracts. Adjustments to prices, such as for seasonality, transport, quality or welfare, must also fit this agreement.
But reversal to price cuts had done little to rebuild confidence among dairy farmers, said Nick Holt-Martyn, of Taunton-based The Dairy Group. “The outcome is that producers have no confidence that processors will deliver a cost-of-production price, or will continue to pay a sustainable price.”
With rising fuel prices and spiralling feed costs, caused by a very poor harvest and shortages worldwide, the new payments only restored the situation which existed back in July, he asserted. In fact, farm-gate milk payments need to rise by 10 per cent in January to ensure there is sufficient production in April, he warned.
The code provides farmers, who must also be allowed to sell milk to multiple buyers, with the means to quit contracts drawn up under the code with no penalty for notice given to a maximum of three months, provided notice is given within 30 days of the notice of price change.
Mr Harrison continued: “Although we have made considerable progress we must continue to work together to translate these promising signs into tangible, realistic, farm-gate payment rises, which reflect what it costs to produce milk, so dairy farmers will have the confidence to reinvest for a long-term future in the industry.”
NFU dairy board chairman Mansel Raymond said: “I am delighted that this important initiative is ready to use. The NFU has championed the need for improving dairy contracts and we’re very pleased that at long last there is light at the end of the tunnel so we can move forward with the industry on a robust and ambitious strategy for the dairy sector.
“We will now be pressing ahead with a number of briefings up and down the country so dairy farmers and processors can see the many beneficial terms of this code translated into beneficial terms in contracts.”