Compulsory milk contracts and £10m collaboration fund offered by Government

Dairy farmers across the UK are being offered a helping hand by the Government following the announcement of a range of measures including compulsory milk contracts and £10m collaboration fund.

The fund of up to £10 million is part of a series of measures to help both farmers and small producers compete alongside larger businesses in the supply chain.

Due to be consulted on in the coming months the fund will work by bringing together and funding those interested in co-operation.

The money could be used to establish, develop or expand so that farmers and growers can take advantage of new market opportunities to help their businesses to grow.

Defra believes that greater collaboration between small farmers could bring “substantial economic benefits”, such as economies of scale, shared knowledge and jointly marketed produce.

The announcement was part of the Government response to the consultation on the remit of the Groceries Code Adjudicator (GCA).

Following the consultation, a raft of new measures and rights will be introduced including introducing compulsory milk contracts between producers and purchasers to help protect dairy farmers.

Using the contracts farmers and small producers will be able to clearly set out the price for the delivery of milk, the timing of deliveries, the duration of the contract, details of payment procedures, and arrangements for collecting and delivering raw milk.

Announcing the measures, Farming Minister George Eustice said the package of measures is designed to improve “transparency and integrity” within the food supply chain.

“This package of measures is designed to improve transparency and integrity within the food supply chain and to support collaborative business models where producers can come together to strengthen their position or work jointly on specific areas of work,” Mr Eustice explained.

“Too often in the past, farmers have ended up being price takers and there have been too many instances where a lack of transparency in prices and charges by some processors has undermined the market.

“If we want a successful farming industry in the future then it is essential that we have properly functioning markets and that farmers receive a fair share of the value of the food they produce.”

Business Minister Andrew Griffiths said the Groceries Code Adjudicator has made a “significant impact”, with suppliers reporting retailers’ improved compliance with the Code.

“Today’s announcement will build on this good work, protecting suppliers and ensuring their rights are enforced when it comes to late payments,” Mr Griffiths said.

“The measures will be designed with the farming industry and apply to farmers and smaller producers in England and are expected to be brought in later this year. The collaboration fund will open for applications later this year.”