| Livestock
Dairy Code of Practise has done
little to help farmers
The introduction of the Dairy Code of Practise in 2012 has done little to
positively affect the farm gate prices received by producers and is largely
ineffectual in the midst of market surpluses and a lack of alternative options.
his was the conclusion of the
recently published Farmers’
Union of Wales report on the
dairy sector.
In addition the report
highlighted that the Code can
do nothing to better the prospects of producers
who have been served notice.
Therefore the Union continues to reiterate
that smaller producers and those in remote
areas are being left vulnerable during periods
of oversupply.
T
“At present, retailer aligned contracts only
account for about four percent of the milk
produced in Wales”
“The industry could see even more falls in
producer numbers as processors ‘cherry-pick’
producers in a bid to reduce operational costs,”
warns FUW Milk and Dairy Produce Committee
Chairman Rhydian Owen.
For producers wishing to take up the option,
the FUW has been a long-standing supporter of
the inclusion of market-related pricing formulas
www.farmingmonthly.co.uk
within dairy contracts.
“Supporters of the formula believe it could
form the foundation for prices which, while
continuing to vary between contracts,
nevertheless represent the true value of milk.
“This would reflect a supply and demand
dynamic that UK milk prices have failed to
recognise over the last decade,” added Mr
Owen.
Other types of contracts, such a futures, may
be of benefit to some producers; although this
will depend on the individual business and the
degree to which some or all of the milk is
included, according to the FUW dairy report.
Mr Owen further stated that whilst the
industry needs different types of contracts to
cope with embedded marketplace volatility,
there must also be a concurrent effort to
increase transparency and proper policing in
the UK supply chain.
Contracts which include mechanisms such
as A and B pricing must also work for the
producer when demand outstrips supply and
should not be used primarily to reduce incomes
in periods of oversupply.
“Proper policing should help to ensure that
contracts remain fair and do not exploit primary
Rhydian Owen
producers. The FUW has repeatedly called for
an expansion of the Groceries Adjudicator’s
power to cover all dairy producers and not just
the small minority on retailer aligned
contracts.
“At present, retailer aligned contracts only
account for about four percent of the milk
produced in Wales and, as such, the majority of
dairy producers are not covered by the remit of
the Adjudicator.
“We would like to see a system whereby the
dairy code is properly policed so that we can
tell straightaway if the purchasers are cherrypicking and if they are not playing fair,” added
Mr Owen.
May 2016 | Farming Monthly | 49