Legislation on milk contracts

westwards

Member
If Chris Walkland is correct in his comments in the British Dairying mag , should Defra or GCA not pull in the retailers and set up proper contracts between the processors and the retailers as well.
Nobody can run or plan a business on a 1 month rolling contract with a perishable product like milk, its about ABUSE of power by the retailers, being able to force the price down and keep it down.
 

bigw

Member
Location
Scotland
If Chris Walkland is correct in his comments in the British Dairying mag , should Defra or GCA not pull in the retailers and set up proper contracts between the processors and the retailers as well.
Nobody can run or plan a business on a 1 month rolling contract with a perishable product like milk, its about ABUSE of power by the retailers, being able to force the price down and keep it down.

That's exactly what I thought and one other comment he made which I think is very important was that processors pick up 100% of producers milk everyday. Farmers need to be more responsible for the volumes produced and should be allowed to have more then one buyer if the wanted to.
 

Alfred

Member
If Chris Walkland is correct in his comments in the British Dairying mag , should Defra or GCA not pull in the retailers and set up proper contracts between the processors and the retailers as well.
Nobody can run or plan a business on a 1 month rolling contract with a perishable product like milk, its about ABUSE of power by the retailers, being able to force the price down and keep it down.
I think that you will find that even on longer term contracts between retailers and processors that it is never on a fixed price or tonnages,.
Prices are always being forced down by the retail market, nothing is set in stone and that includes tonnage supplied by the processors.
This is a very very complex area of contract law with get out clauses everywhere !! And on both sides.
It all depends on supply and demand, how good the alternative export markets are, value for currency ect etc...... As to who's pulling the strings .
 
Location
southwest
If Chris Walkland is correct in his comments in the British Dairying mag , should Defra or GCA not pull in the retailers and set up proper contracts between the processors and the retailers as well.
Nobody can run or plan a business on a 1 month rolling contract with a perishable product like milk, its about ABUSE of power by the retailers, being able to force the price down and keep it down.


I think you'll find that Supermarket/processor contracts run for 1-3 years


Which rather begs the question, why do processors seems to alter prices on an almost monthly basis?
 
Location
southwest
I think that you will find that even on longer term contracts between retailers and processors that it is never on a fixed price or tonnages,.
Prices are always being forced down by the retail market, nothing is set in stone and that includes tonnage supplied by the processors.
This is a very very complex area of contract law with get out clauses everywhere !! And on both sides.
It all depends on supply and demand, how good the alternative export markets are, value for currency ect etc...... As to who's pulling the strings .

How can retail contracts be affected by prices in the retail market? It's the supermarkets who set the retail price. Also bear in mind that the retail price fluctuates far less than the ex-farm price, and isn't affected by anything else (as it's on a contract)
 

Alfred

Member
How can retail contracts be affected by prices in the retail market? It's the supermarkets who set the retail price. Also bear in mind that the retail price fluctuates far less than the ex-farm price, and isn't affected by anything else (as it's on a contract)
You misunderstood, maybe I didn't explain it well enough for you!
The retail market is forcing down prices through the supply chain, the price in the shops has very little to do with the sector that operates as the retail market the two are completely separate.
 

Alfred

Member
I think you'll find that Supermarket/processor contracts run for 1-3 years


Which rather begs the question, why do processors seems to alter prices on an almost monthly basis?
Simple because as soon as the prices in the dairy markets drop ie. Wholesale cream, smp, butter ect ect... The retail buyers are straight on the phone asking for reduction in prices from the suppliers and as I said earlier contracts maybe agreed for 3 years but prices and tonnages are variable to accommodate the length of the contract! And this is why its a very complex area.
 
Location
southwest
Simple because as soon as the prices in the dairy markets drop ie. Wholesale cream, smp, butter ect ect... The retail buyers are straight on the phone asking for reduction in prices from the suppliers and as I said earlier contracts maybe agreed for 3 years but prices and tonnages are variable to accommodate the length of the contract! And this is why its a very complex area.

Which is exactly the problem-retailers will use anything to drive their purchase price down. Because as sure as eggs is eggs, the shopfloor price in Tesco etc doesn't track changes in "world dairy market" prices.

Someone in the supply chain needs to show a bit more backbone (or legislation is needed)

If you sold wheat for Jan delivery at £200/t and the compounder rings in December and says the price is down to £180 due to "world prices", you'd tell them to fudge off wouldn't you? But this is happening on a monthly basis with milk prices.
 

westwards

Member
I thought Chris Walkland's article in British Dairying mag on the Cream and Milk price review was very revealing and just another reason we need better contracts.
It is clear from his article that the whole system is broken, the non aligned producers are getting stuffed on the cream price and the aligned farce is about to unravel with Sainsbury and Tesco about to flex there muscles in a battle with Muller, and what ever happens producers will be made to pay for what ever they dream up.
 

Alfred

Member
I see that in potters news update freshways are getting some flack, over short notice changes to their contract payment terms .
Giving producers only one weeks notice of changes to the basket pricing mechanism without consultation either !!
 

westwards

Member
Any Muller producers had a good look at the notice period on their contract lately ? @Coo man

I here they have sold the Muller dairy in East Kilbride !! How long till they pull out of Scotland and start charging ALL the Scottish producers haulage to take the milk down south ? @Alex72
 

Alex72

Member
Location
Scotland
Any Muller producers had a good look at the notice period on their contract lately ? @Coo man

I here they have sold the Muller dairy in East Kilbride !! How long till they pull out of Scotland and start charging ALL the Scottish producers haulage to take the milk down south ? @Alex72


Muller still leasing the Aberdeen site, 3 years after closing it!
 
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