NFU dairy board chairman Mansel Raymond will make the commitment at this year’s Dairy and Livestock event, urging processors to ‘grasp the nettle’ on the voluntary code of best contractual practice.
Raymond said: “It’s simply not an option for farmers to go on seeing farm gate milk prices, which bear no relation to the value of dairy products or farm costs.”
The NFU will spell out the current situation during a speech which will include the weighted European average farm gate milk price at 31 pence per litre (ppl), world average price, according to figures compiled by the LTO, equating to near 34ppl and Average Milk Price Equivalents and Milk for Cheese Value Equivalents – the market indicators which form the basis for the NFUS’s milk price formula – both at over 32ppl.
Raymond added: “These statistics speak for themselves. Roughly speaking, we are seeing about 10 billion litres of milk being sold on average 4ppl below its worth or below its cost to produce. That’s £400m per year or roughly £40,000 per farm. It’s no wonder investment in the future is so hard to manage or to justify.
“Following the publication of proposals for legislation around milk contracts by the European Commission, Defra minister Jim Paice has challenged the dairy industry to agree a voluntary code of contractual best practice and I have accepted this challenge.
“By identifying the best elements of dairy contracts that offer the best prices in the market and the worst elements of those contracts that fail to reward farmers for their efforts, we can work together towards mutually beneficial trading terms for the dairy sector.
“We need to see a shift away from buyers having the discretion to make fundamental changes to business terms, such as price and pricing schedules, without proper consultation or transparency.”
Source: NFU
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