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03/08/07
The Royal Association of British Dairy Farmers has called
for milk contracts to be less prescriptive and more in touch
with the realities of the marketplace.
The Association believes that farm-gate milk prices are ‘ridiculously
low’ and that many contracts on offer to farmers contain
unreasonable clauses and unworkable demands.
RABDF chairman Lyndon Edwards commented: “Despite the improvements
in world dairy commodity prices, money is not currently being passed
back to farmers the way it should be and farm-gate prices remain
ridiculously low, perpetuating the situation of constant under
recoupment of production costs. There is now no justification for
this as far as we are concerned, but unfortunately, due to the
lengthy contracts farmers are locked into, they are completely
powerless to do anything to help themselves and remain at the mercy
of their processor.
“We would like to receive a straight answer from all the processors as
to why farm-gate milk prices are not tracking the world market. Arable farmers
have a transparent market, so why don’t we? It is not acceptable for processors
to use milk contracts as a convenient excuse and simply pocket the benefits for
themselves. It is shameful behaviour, especially when they are aware of the chronic
financial crisis many dairy farms are faced with.
He adds; “Processors need to stop living in the past. If they continue
to stitch farmers into a loss making situation, their only alternatives will
be either be to set up their own quota holding groups and have their milk processed
on contract or to go out of business, which will result in an even greater supply
shortage in the UK.
“Milk contracts should be forged with a sense of realism from both parties.
On the one hand, it is unrealistic for farmers to allow themselves to be steam
rollered into signing contracts which do not fit their production systems as
a result of the climate of fear they are being held in. On the other, many of
the contracts on offer from processors and retailers have impracticable, unreasonable
demands, and the notice periods farmers’ have to give to get out of them
are ridiculously long and do not allow them to take advantage of market opportunities.
It is high time processors took their head out the sand and woke up to reality.”
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