Following the upheavals in summer, which saw pressure groups including the Womens’ Institute mobilise in support of dairy farmers to oppose price cuts which would have taken farm gate milk prices 5ppl below the cost of production, prospects now seem better for the dairy industry.

Nevertheless, despite announcements promising a slew of price rises for milk producers in recent days, dairy industry leaders are meeting with MPs to ensure the Dairy Crisis which rocked the sector between May and August is not repeated. A delegation from the NFU will meet with a House of Commons Committee this week as part of an inquiry into the future of the industry.

Last week, dairy representatives from the UK’s farming unions met to discuss the events of the summer, UK and global market opportunities and the challenge of spiralling production costs. Union representatives said that, historically, problems in the dairy industry have been linked to an imbalance of power, where producers do not see costs rise as fast or high as dairy commodity markets though they quickly feel the sting when the markets are weak.

The summer’s protests and blockades of processing plants ended with the reversal of a proposed second round of price cuts and the negotiation of a voluntary code of practice governing supply chain relations in the dairy sector. However, as has been the case with the fresh produce sector, producers fear that powerful processors and retailers will be under little obligation to adhere to the code, at least until an ombudsperson is put in place. Government announcements this week suggest this may not be until the end of 2013.

The Groceries Code Adjudicator Bill, which will lead to the instatement of a supply chain watchdog, had its second reading in the House of Commons on Monday, and will now be considered in Committee over coming weeks. It is expected that pass through through Parliament in early 2013. Although the legislation is progressing, there are fears that it has been weakened following lobbying from retailers.

NFU President Peter Kendall warned against this on Tuesday (20th November). He said, “MPs must amend the Bill to ensure the adjudicator will, from day one, be able to fine retailers who are found to be in serious breach of the Groceries Code. Producers and suppliers have for too long been subject to unfair treatment by large retailers. Despite some positive work in recent years, abuse still happens. It is vital that Parliament ensures the adjudicator is equipped with the full range of powers to do his or her job effectively.”

Neil Carmichael, Conservative MP for Stroud, said on Wednesday that he had talked to dairy sector representatives ahead of this week’s commons debate. He said, “The formation of producer groups would help to strengthen the bargaining position of farmers and an increased focus on added value products, notably cheese and yogurt.”

Following the dairy meeting on 12th-13th November, Gary Mitchell, NFU Scotland dairy committee chair also commented, “Now is the time for farmers to collaborate and pull together. Collaboration can take many forms, from working with producer representatives, exploring the opportunities of membership of a producer organisation or joining a co-op. The bottom line is that there is strength in numbers and now is the time to work together to optimise returns from the market.”

Since the events of the summer, farming groups have consistently called for greater transparency in the supply chain, which has been granted in part by some processors who altered their payment mechanisms in the wake of the protests. As well as advising processors to maximise their own influence by joining together, farming groups have called for industry reforms which will bring in fairer contracts.

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