The NFU has called for the formation of new producer organisations (POs), in light of a new EU report, which shows these groups have improved farmers’ supply chain position in some EU countries.

The union’s dairy board chair Michael Oakes said, “We must develop a collaborative dairy industry that can compete effectively in the UK and on the world markets.”
 
Oakes was speaking after the release of the EU Commission report into the impact of the 2009 Milk Package, which looked at the role POs can play in increasing farmers’ bargaining power. He said the report echoes the NFU’s calls for “fairer, more balanced milk contracts” and “Stronger producer representation.”
 
According to the report, some EU countries which have fully adopted the measures within the package have improved dairy farmers’ position in the supply chain.
 
In 2009 the NFU, NFU Scotland and DairyUK agreed a voluntary code of conduct on contractual relationships, pursuing this route over the chance of regulation which Defra was contemplating at the time. On Thursday, the NFU’s milk board chair admitted that the voluntary approach has not led to any wholesale change of behaviour from milk buyers, as many farmers continue to be treated unfairly, with contract terms changed with little or no notice and verbal assurances offered by milk buyers but then withdrawn.
 
Mr Oakes said, “The thrust of the EU Commission report is on the role of dairy Producer Organisations. This is something the NFU has always promoted and encouraged. It’s a shame that many UK milk buyers, both large and small, see POs as a threat and have publicly said that they will not work with farmers who are part of a PO. Today in the dairy farming sector, collaboration is the key and the NFU sees POs as a vital part of developing new relationships in the UK dairy sector.
 
“While this report concludes that the EU milk package must continue post-2020, I would urge our Government to read the report carefully and ensure that many of the recommendations are implemented here to the benefit of UK dairy farmers. It would be extremely unfair if the Commission supports EU farmers to collaborate and increase their bargaining power in the supply chain but the same support isn’t offered here in the UK.”

On Thursday, farming minister George Eustice said he is reviewing the option of bringing the dairy sector’s voluntary code under the remit of the Grocery Code Adjudicator. There have been calls to expand the watchdog’s remit since the role was first created; adjudicator Christine Tacon’s office currently only has oversight over relationships between the UK’s ten largest supermarkets and their direct suppliers. On Thursday, Eustice also indicated he is considering promoting the role of POs.