Potential benefits of a code to manage relationships between farmers and milk processors are failing to be fully appreciated throughout the dairy industry, a review of the voluntary agreement has found.
The Dairy Industry Code of Best Practice for Contractual Relations was introduced in 2012 to build trust in a sector dogged by price volatility that has too often left farmers struggling to make profits.
In an independent annual report into the effectiveness of the code, Conservative Scottish Parliament Member Alex Fergusson said: “Where the voluntary code has been embraced it has been a positive tool, but a major weakness remains in that it is not embraced by more producers, producers’ representatives and purchasers.
“In my opinion, the potential benefits that can be gained by embracing the Code are not fully appreciated throughout the sector.”
The review was welcomed by Rob Harrison, dairy board chairman at the National Farmers’ Union (NFU).
“The voluntary code review has been taking place to ensure that the code continues to improve fairness of contracts and to create transparency between farmers and processors in the dairy industry. I would like to thank Rt. Hon. Alex Fergusson MSP for his review of the voluntary code and its processes.
“We welcome the outcome, which shows that the code has been effective from the beginning with recommendations supporting many existing points and that it works at its best when embraced fully by processors.
“We also support further recommendations, including exclusivity in contracts, which is especially relevant during the difficult times farmers are currently facing.
“At the NFU, we have been working hard to ensure that the voluntary code helps to further fairness in dairy contracts and we are committed to continuing this work in the future.”
Among the recommendations made by Mr Fergusson was a call for farming leaders, including those at the NFU, to engage with retailers to explore the possibility of expanding the adoption of the code within the supply chain.
In his report, the MSP said: “Extending the Code upwards through the supply chain could only strengthen the Code itself, encourage its adoption by purchasers and processors who currently see no need to embrace it and yet remain voluntary in nature.”