Landmark code deal could secure dairy sector

Milk producers and political leaders throughout the UK yesterday welcomed the landmark agreement on a voluntary code of practice which will help set the price of milk in the future.

The move comes after a stormy couple of months, with producers – facing cuts to the price for their milk – setting up a series of protest meetings and blockades of milk processors’ and major retailers’ premises.

Rory Christie, vice chairman of the NFUS Milk committee said the agreement was highly significant: “It is about British dairy farmers working together with British dairy processors to improve the industry.

“Individually farmers can be weak, but the NFUS believe that dairy farmers working together can achieve a great deal and we will be continuing this collaborative effort as we work to ensure the code is implemented in the best way for our dairy members.”

For the processing industry, Dairy UK director general Jim Begg said the initiative built upon existing arrangements and the new deal would add additional safeguards that would assure farmers that their contracts were not putting them at a disadvantage in the marketplace. Begg stressed that he hoped the spirit of co-operation that brought the agreement together could be carried forward into the future.

Mansel Raymond, the English NFU dairy board chairman, pointed to the many months of hard work put in by all parties in getting the deal.

“The NFU has championed the cause of improving dairy contracts and we are now very pleased to be launching this code of best practice,” he said. “Getting this code agreed is the right footing to move forward with the industry on a robust and ambitious strategy for the dairy sector, which is a priority for us.”

The agreement was also welcomed by Scottish rural affairs secretary Richard Lochhead, who hoped it would lead to dairy farmers getting a fairer share of every pound spent on milk “It is a huge step in the right direction and means that contracts in future between farmers and dairy processors will be freely negotiated; will be fairer and more transparent,” he said.

Lochhead added that he did not see the code as the end of the issue: “It is important we continue to look at further ways in which we can support the entire primary supply and processing sectors who face rising input costs and pressure on margins.

“The UK government agreed previously to explore a possible role for the new groceries code adjudicator in this issue and I will be pressing for this still to be taken forward.”

In another move yesterday, Dutch farmers’ co-operative Arla Foods, which buys a significant percentage of the milk produced in the UK, announced that it would raise the price it paid its suppliers to 29.5p per litre from 1 October.

The company also announced its support for the code of practice and its aim to deliver a “transparent and sustainable pricing model” by next year. Arla suppliers would also move towards becoming full members of the cooperative.

NFU Scotland’s milk policy manager George Jamieson said the announcement from Arla significantly raised the bar on milk price and it signalled the company’s intention to secure a fair milk price in negotiations with its customers.