UK dairy should concentrate on growing the income from its products, not squabbling over the way it is sliced in the Government’s review of dairy contracts.
Speaking at the Semex Conference, Glasgow, last week, dairy analyst Chris Walkland called on farmers to resist the urge to scrap discretionary pricing.
He was critical of the farming unions’ position on contract regulation, accusing them of focusing too much on the relationship between processors and farmers, rather than the bigger picture.
“Getting consumers to pay more is the only way to grow incomes, he said.
But NFU president Minette Batters said the union was taking a ‘whole supply chain approach’.
She said: “We have had the voluntary code. It does not work and will not work. We have an opportunity where we can look at our own legislation.
“Farmers have been price-takers. The rise of the discounters is only going to get more and more challenging.”
Mr Walkland criticised those who said the market lacked transparency, adding it was transparent ‘if you know what to look for’.
He said the industry should resist calls to scrap discretionary pricing, claiming his own analysis showed farmgate prices between January 2015 and December 2017 had almost always been within 2 per cent of where they should be.
“There are terms and conditions that need addressing,” he said.
“But you might end up exchanging something that is not broken with something that does not work.”
He added bad contracts for a minority were not the enemy of the majority; the future was in innovation, such as futures contracts and fixed price contracts, not in legislation.
Farming Minister George Eustice disagreed with Mr Walkland.
“At the moment, retailers can decide they are going to offer milk at four pints for £1, which then puts pressure on sellers,” he said.
“It is too easy for processors to say we need to keep up our relationship with the supermarket so we are going to drop on the producers.”