Consultation must enable a sustainable future for Welsh dairy industry

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The landmark consultation on dairy contracts must bring an end to unfair conditions and instead focus on a more sustainable and progressive future for the sector, says NFU Cymru.

The union states that the milk supply contract consultation presents a long-awaited opportunity to examine issues within the supply chain and provide new, fairer conditions for milk contracts.

NFU Cymru submitted its response to the consultation, run by Welsh Government in conjunction with the other UK Governments, this week following extensive engagement with its membership.

NFU Cymru Dairy Board Chair Abi Reader said: “This consultation presents an opportunity to change the structure of the dairy industry to make it more sustainable, progressive and improve the way farmers and processors work together for common goals. The contract sits at the heart of the future of the dairy sector in this country and this is a long-awaited opportunity for change to secure the future of the Welsh dairy sector.

“The consultation has further highlighted the concerns held in the sector for many years around unfair milk contracts. In their current form, many of these contracts do not create mutually balanced business relationships between buyers and sellers. We have heard from dairy farmers whose contract terms have been altered by their buyer at short notice and without reasonable discussion, negotiation or agreement. All too often we see situations where rights and obligations are heavily weighted in the favour of buyers. A recent example of this was during the recent Covid-19 crisis where we saw retrospective price reductions instigated by some milk buyers. These actions cannot be condoned, and this process must see such practices be brought to an end.

“NFU Cymru is clear that we do not want to ‘fix that which is not broken’, and indeed there are a number of successful relationships between milk buyers and farmers that are delivering results for dairy farmers. Our vision is that this consultation will enable these positive examples of working together to be built upon and ensure that every supply chain relationship in the dairy sector operates in a similar fashion. Our members want to ensure they receive a sustainable milk price, but they also want their milk buyers - be they farmer-owned cooperatives or private companies - to also be strong businesses with the ability to continue to invest in the Welsh dairy industry going forward. We must ensure regulation minimises bad practice and unfairness without inadvertently impacting good practice.

“This is only the start of the process and we are committed to working with Welsh Government, their counterparts across the UK, our fellow UK farming unions and associated industry bodies to achieve our aim of establishing sustainable processes, procedures and a regulator, while avoiding any unintended consequences of pitfalls.”

The key areas covered in the NFU Cymru dairy contract consultation response are:

1. Pricing mechanism

2. Relationships and farmer representation

3. Exclusivity and volume

4. Elimination of unilateral changes and one-sided contract terms

5. Consequences of breach

Last edited: 13:01 on 17 September 2020

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