The Farmers’ Union of Wales has cautiously welcomed the recent UK Milk Purchasing Code draft policy. However there are some reservations regarding farmer-owned cooperative milk processors.
FUW Milk and Dairy Produce committee chairman Dei Davies said: “Hufenfa De Arfon, ARLA, First Milk and many more prove that co-operatives work. The new code should not put Co-operatives in a position where they are unable to re-invest profits and grow different parts of the business together with providing a long term economically viable farmgate price to benefit the co-operative as a whole.
“While it is not expected for milk purchasers to pay more to the farmer than what the market is worth at the time, neither is it right that they take advantage of farmers who are on fixed term contracts e.g 12 months to help them strike deals with big retailers to undercut other dairies.
“If processors are tied into offering a guaranteed price to producers, it could threaten the viability of both businesses given that they operate under an extremely volatile market which is controlled by price rather than legislation.”
The Union's committee, which carefully considered the draft code, also agreed that a clause which provides flexibility for farmer owned and directed co-operative processing businesses should be included for the same reasons that exempt co-operative purchasers from the 2012 voluntary code.
“The structure of co-operative purchasers are unique compared with other milk purchasers in such a way that business strategy decisions are made and executed by farmer elected representatives with the best interests of milk producers in mind,” he said.
Mr Davies added that the Union would also like to see more detail about dispute resolution in the proposal which has been in the pipeline for the best part of a decade. He added: “The Union will continue to lobby the UK government on the proposed changes.”