Farmer1001
Member
Milk contracts in general (not all but most) are unique, they are biased toward the buyer and damaging for the industry. The simple ability of a milk buyer to impose price cuts on a producer with little, none or even retrospective notice is a clear example of where the power lies. But this type of 'norm' has done damage that goes way beyond the direct impact on farm, it has allowed milk buyers to become complacent and lazy, it allows them to simply pass on price cuts imposed by their customers so that ultimately it makes little difference where the 'retail' price is as any cuts can be passed down the line to the producer.
So whilst many milk buyers will protest that inposeing new contract terms is going to be shockingly bad, here's why is will be absolutely great for British dairy farming.
Let's say a milk buyer has to commit to a fixed timescale contract at a fixed price (whatever that period is), it means milk buyers will have to be hungry for new markets and new products to ensure they can cope with the milk they have committed to without the safety net of cutting prices should the market change. Indeed if they want to expand and develop then they will have to search out those new markets and opportunities - this is how the business world operates in a competitive market without the ability to simply pay your supplies less.
But this is just the tip of the potential benefit to the wider industry, because the current market has seen milk rediced to commodity status below that of water, traded on price, not merit and hung out to dry in a consumer world where the 'alternatives' are going hammer and tong to kill off the dairy industry. So on the back of milk buyers searching out new exciting markets, brands and products, we will see massive advertising to sell those products to consumers, by default this will see a return to wide scale advertising and promotion of British dairy products and British dairy farms - I mention the latter because consumers want to know more about the milk than th price, they want to know the impact it's production has on the farm, environment, the people, the economy and of course the cows. So milk buyers will champion dairy farmers in a bid to attract more consumers to their brands.
These changes are not about enforcing change on dairy farmers, it's about creating fairer contracts for producers, there will be lots of variations from all,buyers, but the major point is there will be minimum standards that don't currently exist.
There is a long way to go before contracts are changed (see link), but the commitment is there to make it happen and the NFU dairy team deserve huge credit - I am not a fan of the NFU as an org, but I am a fan of the individual who has been driving this.
https://www.gov.uk/government/news/new-measures-to-help-farmers-and-growers-in-the-food-supply-chain
So whilst many milk buyers will protest that inposeing new contract terms is going to be shockingly bad, here's why is will be absolutely great for British dairy farming.
Let's say a milk buyer has to commit to a fixed timescale contract at a fixed price (whatever that period is), it means milk buyers will have to be hungry for new markets and new products to ensure they can cope with the milk they have committed to without the safety net of cutting prices should the market change. Indeed if they want to expand and develop then they will have to search out those new markets and opportunities - this is how the business world operates in a competitive market without the ability to simply pay your supplies less.
But this is just the tip of the potential benefit to the wider industry, because the current market has seen milk rediced to commodity status below that of water, traded on price, not merit and hung out to dry in a consumer world where the 'alternatives' are going hammer and tong to kill off the dairy industry. So on the back of milk buyers searching out new exciting markets, brands and products, we will see massive advertising to sell those products to consumers, by default this will see a return to wide scale advertising and promotion of British dairy products and British dairy farms - I mention the latter because consumers want to know more about the milk than th price, they want to know the impact it's production has on the farm, environment, the people, the economy and of course the cows. So milk buyers will champion dairy farmers in a bid to attract more consumers to their brands.
These changes are not about enforcing change on dairy farmers, it's about creating fairer contracts for producers, there will be lots of variations from all,buyers, but the major point is there will be minimum standards that don't currently exist.
There is a long way to go before contracts are changed (see link), but the commitment is there to make it happen and the NFU dairy team deserve huge credit - I am not a fan of the NFU as an org, but I am a fan of the individual who has been driving this.
https://www.gov.uk/government/news/new-measures-to-help-farmers-and-growers-in-the-food-supply-chain