Dairy processing giant Dairy Crest has caved to mounting industry pressure and acknowledged the notice period given to its farmer suppliers ahead of price cuts in April was too short.

Facing condemnation from farming organisations, most vocal of which was the NFU, over its decision to cut farm-gate milk prices for fresh milk suppliers with just four days’ notice, Dairy Crest last week committed itself to giving suppliers more notice.

Dairy Crest’s price cut of two pence per litre at the end of April sparked a slew of copycat cuts from other major processors. The group said it would give all farmers four weeks’ notice of any future decisions, but pointed out that it is contractually obliged to give only 24 hours’ notice on such changes.

A spokesperson for the company said “We think it’s right that we should give our suppliers an appropriate degree of notice.”

Defra has pushed for a voluntary code of practice to govern the dairy industry, which it is hoped will result in more security in the supply chain; however, farming groups have said that radical changes are needed to address the serious imbalance of power which exists between suppliers and large retailers and processors. Organisations including Copa Cogeca have also called for the establishment of more collectives in response to exploitative practices, which they say would improve farmers’ bargaining position.  

In April, NFU dairy board chair Mansell Raymond drew attention to the discrepancy which exists between Dairy Crest’s obligation to give just 24 hours notice of a price change and farmer producers’ 12-month notice period on their contracts. He called for the introduction of break-out clauses to contracts to bring to an end the imbalances inherent within the current supply model.  

In the UK, average farm-gate milk prices remain below the cost of production and around 4 pence per litre below the European average.

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