THE NFU is committed to working with the rest of the supply chain to achieve fair contracts for dairy farmers – but it will not shy away from calling for government intervention to ensure its members get a fairer deal.

Speaking at the recent Dairy and Livestock Event, Mansel Raymond, NFU dairy board chairman, urged processors to grasp the nettle on the voluntary code of best contractual practice.

He said: “It is simply not an option for farmers to go on seeing farm gate milk prices, which bear no relation to the value of dairy products or farm costs.

“Milk buyers either need to take responsibility for their suppliers and pay a price linked to costs of production, market linked formulas; or the market needs to function to allow competition to have a real and timely effect on farm gate milk prices.”

UK dairy farmers receive the lowest price for their milk in Europe – bottom of the 27 member states. The average European farm gate price is 31ppl and the world average near 34ppl.

Mr Raymond said: “Roughly speaking, we are seeing about 10bn litres of milk being sold on average four pence per litre below its worth or below its cost to produce; that’s £400m per year or roughly £40,000 per farm. It’s no wonder investment in the future is so hard to manage or to justify.”

Following the publication of proposals for legislation around milk contracts by the European Commission, Farms Minister Jim Paice challenged the dairy industry to agree a voluntary code of contractual best practice – Mr Raymond said he had accepted the challenge.

He said: “We need to see a shift away from buyers having the discretion to make fundamental changes to business terms, such as price and pricing schedules, without proper consultation or transparency.”