Phil Latham: If direct support dwindels we'll need a fairer deal from the markets

livestockfarm lifedairyColumnistsIn your fieldWeather+-

I am not sure when I dozed off but when I fell asleep it was July and I seem to have woken up in November. The weather seems quite grim and it is getting in the way of finishing our haylage season; the combine has not made an appearance yet.


The plague of mechanical failures besetting the kit continues and we need to invest in some new tackle. In essence, we need a good bit of sunshine and a healthier milk price. Fingers crossed both are coming and we can knock off third cut silage, the barley and oats and start preparations for the September horse trials.


A month on from the Brexit vote and life seems to have gone back to normal. It is time to develop our own domestic agricultural policy for the UK, or perhaps just Wales and England, but I think the Welsh are developing their own ideas so perhaps we might just focus on an English agricultural policy. If direct support dwindles we will need to get a fairer deal from the markets and an extension of the Groceries Code Adjudicator’s role might facilitate this.


Whatever the policy is, it must address the fundamental weakness of the way we do business, enshrined in buyers’ discretion. For the privilege of buying all my milk my buyer can change all the terms without negotiation. This is a little one-sided and I think the nature of these contracts would not be recognised in any other form of industry.


The manipulation of farmgate prices by buyers applying B prices in the downturn then discarding this model in the up, capping B prices or introducing new C prices for lack of supply is clear to see.


Couple this with basket-based contract pricing often linked to a company whose pricing model is based on a different currency and discretionary payments which are not reported in the contract pricing and it is clear farmers are carrying all the risk and receiving an inequitable share of available margin.


It was hoped this market failure could be addressed by a voluntary code for contracts but the exclusion of cooperatives from the code gave smaller processors the excuse they may be at a competitive disadvantage and they chose not to apply it.


We need a mandatory code for dairy contracts ensuring producer representation and prices based on a fairer market index.

Farmers Guardian
Posted by Farmers Guardian
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