08/13/2019 | News release | Distributed by Public on 08/13/2019 03:24
Whatever Brexit we get, we still need a supply chain that works for all writes Policy Manager George Jamieson.
The upcoming consultation on dairy contracts is the most important opportunity the sector will have to address the power imbalance which underpins unfair contract terms.
This initiative goes beyond dairy and could help deliver supply chain fairness in other sectors too.
Given the dairy sector has tried a voluntary Code, which the independent Grocery Chain Adjudicator has judged to have failed, Government views the dairy sector as an opportunity to 'test' regulation as a potential route to improve all supply chains.
We support this intervention and the stated willingness to regulate. We understand in many cases regulation is not welcome, but sometimes it is essential, so it must be effective and well considered.
In order to gauge farmers and other stakeholders' opinions, NFUS held meetings across Scotland to inform dairy farmers and associated businesses of the potential in government regulating dairy contracts between producers and processors.
Farmers are reliant on processors, retailers, other end users and ultimately the consumer. For dairy, government statistics confirm that the average dairy farmer's income is highly dependent on the market, with 'support' only around 10% of income.
That means a fair share of the returns from the market are fundamental to any chance of profitability for a dairy farmer. The future of production and investment in the sector is dependent on all parts of the 'chain' as none can prosper without the other.
The vagaries of global markets will dictate the value of our product, but the terms in the contract a farmer has with their milk buyer are currently dictated by the buyer. Too much risk, uncertainty, higher standards and even NGO demands are transferred farmers without agreement, because it is easy.
These are very clear reasons why we need contract regulation and the upcoming consultation from Defra will seek opinion and enthusiasm for change. All players must engage positively and follow up with an agreed industry solution, not diluted by ill-informed brinkmanship by those who fear positive progress.
Some key issues to consider;
These are some of the major concerns that will be raised, and we hope we can resolve.
NFUS can only stress the huge relevance of this initiative by Government to improve the position in the supply chain of farmers and improve all food supply chains efficiency moving from short term reactions to longer term planning.
For further detailed Frequently Asked Questions please see https://www.nfus.org.uk/nfuscontent/business-guides/17509/dairy-contracts-frequently-asked-questions.