Minister rules out using law to enforce fair price for farmers

Farming Minister David Heath said he believes a voluntary code of conduct for the dairy industry, drawn up following last year’s blockades of milk depots, is functioning well, despite only one processor having signed up to it in full.

Mr Heath is now under pressure from the National Farmers’ Union (NFU) to “call in” milk buyers who have failed to implement the voluntary code of best practice.

The Department for Environment, Food and Rural Affairs (Defra) has confirmed that Ministers had adopted the voluntary code on contractual relationship as “a viable alternative” to discretionary legislation proposed by the European Commission as part of its Dairy Package. Dairy UK, the organisation representing all parties involved in the dairy industry, said the Government had made “absolutely the correct decision”.

However, Mansel Raymond, the NFU dairy board chairman, wants Defra to “ramp up the pressure” to ensure the voluntary code is the success it can and should be, sentiments echoed by the Tenant Farmers Assocation’s dairy representative Richard Elliot, who said: “Our members’ patience is growing very thin; if milk buyers can’t be trusted to do the right thing and work with farmers to deliver better contracts then Government needs to step in. This isn’t rocket science, we just want a fair deal.”

The vast majority of UK dairy farmers have a written contract with the processing company that buys their milk but about 65 per cent of contracts do not include a guaranteed, transparent price for the producer. Many contracts either do not specify milk volumes or offer no scope for price adjustments based on milk content or quality, and in some cases both.

Mr Heath came under pressure from farming campaigners to pursue statutory measures at the end of a March deadline set by the dairy industry to demonstrate that milk processors were capable of effective self-regulation.

The Liberal Democrat expressed optimism that the voluntary agreement represented “a sea change in relationships within the industry” and urged industry players to “turn fine words into real action” following a tumultuous summer last year when dairy farmers staged protests outside dairies and supermarkets.

The code was published last September by Dairy UK and has been adopted by 11 milk companies.

A Defra spokesman said: “The April deadline was put in place to give industry time to achieve a voluntary agreement between themselves and I think that’s what has been done and so there is no intention to push for compulsory legislation on the back of that voluntary agreement.

“The code is a far better alternative to legislation. It already covers 85 per cent of British dairy production and we want to see more processors signing up.”

Farmers For Action (FFA) led the calls for Mr Heath to intervene. Mr Raymond fears many companies are not complying with the code.

“While a number of large milk buyers are implementing the code, there still some who have failed to step up to the mark and make the changes we have demanded. Since our March deadline passed, the (dairy) coalition has been applying pressure in various ways to get processors to act. This has included calling on retailers to insist that their supply base offers farmers compliant contracts. This, however isn’t enough.”

Dairy industry spokesman Jim Begg claims many companies have been so thorough in their adoption of agreed standards that they had exceeded them,

Director general Mr Begg said: “All stakeholders agree that the voluntary approach is more flexible, can do more, and in a shorter timeframe, than regulation. Regulation would seriously destabilise supply chains.”

Dairy UK’s Mr Begg dismissed the FFA’s concerns, stating the situation was a massive step forward.