NFU/NFUS Dairy Contract Looks For Greater Fairness
16/11/07

The NFU and NFU Scotland have launched a model milk contract designed to bring greater fairness to the relationships between milk producers and purchasers and to stimulate debate on a number of important issues.

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The document sets out a flexible template for the terms and conditions that the two unions believe should be contained in milk contracts and it is hoped it will promote discussion and
lead to positive changes that will benefit the whole sector.

Gwyn Jones, NFU dairy board chairman, said: "There has been some genuine progress in milk contracts in the last few years, stimulated by the NFU Vision for the Dairy Industry and the Milk Development Council's excellent report on contracts in 2005.

“But these are not grounds for complacency. We still see problems from a producer perspective in milk contracts, especially an inherent unfairness in key commercial issues such as milk price determination. And with the dangers of more market volatility going forward and the probable ending of milk quotas in 2015, it is right that we now examine the future of
milk contracts.”

The NFU/NFUS Milk Contract contains a number of important debating points including:

• Whether there may be value for some producers in rolling term and fixed volume contracts that may allow producers to supply more than one buyer
• The fixing of milk price and price setting in the contract with variation processes that encourage proper negotiation
• Clarity on milk testing regimes, especially for antibiotics
• The extent of liabilities on the part of producers and their purchasers

Willie Lamont, NFU Scotland Milk Committee Chairman, said:

“This is not about instability, settling old scores, or encouraging farmers to get out of contract. On the contrary, we and the vast majority of dairy farmers want to see long-term relationships, more vertical integration, and responsible supply chains. But we all want to see fairer relationships that build trust and confidence.

"We are offering a number of suggestions and potential solutions to some tricky issues but we really want to encourage debate and action from both farmers and purchasers that leads to positive change, setting the industry up for the long-term.”

A copy of the contract is available on request.

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