THE Government is actively working to set up a futures market for dairy produce to help protect farmers against volatile prices, the Farming Minister said.
George Eustice said his department had recruited specialist staff to investigate how a futures market could be established in either skimmed milk powder or butter.
A futures market is used by sellers to protect themselves from big swings in prices by entering into a contract to sell produce at a set price at a future date.
With The Yorkshire Post’s Clearly British campaign calling for clear dairy labels to make it easy for shoppers to buy products made with milk from British farms, a futures market is seen as another way of adding resilience to dairy farming at a time whenfinancial volatility is driving dairy farmers out of business.
Mr Eustice revealed the move at this week’s All-Parliamentary Efra select committee in answer to a question by the Conservative MP for Richmond Rishi Sunak.
Mr Eustice said: “There is a role for such a market in a post-quota environment to help manage the risk of future volatility.
“This would better enable farmers to fix their prices for a longer period of time and know what they are going to get for the production they are investing in.”
He said Defra was working with the Agricultural Horticultural Development Board and had recruited a specialist in financial futures markets and hedging to see how a dairy futures market might work.
The Minister’s announcement was welcomed by Mr Sunak, who called for a dairy futures market among ten measures he had outlined to help dairy farmers hit by the low price of liquid milk.
Mr Sunak, who has publicly backed the Clearly British campaign, said: “The price stability this (a futures market) can give has the potential to be invaluable to dairy farmers trying to survive in such a volatile market.”
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