Dairy Crest and Müller Wiseman have slammed Arla for cutting its farmgate milk price with just three days’ notice, warning the move could undermine the dairy industry’s voluntary code on milk contracts.
Arla announced it was cutting its price by 1.27ppl to 33.74ppl last Friday (25 April), with the new price coming into effect the following Monday (28 April). Under the voluntary code, processors must give farmers at least 30 days’ notice of price changes, but there is a clause that exempts farmer-owned co-ops such as Arla.
The exemption has annoyed non-co-ops ever since the code was agreed in 2012, but Arla’s price cut last Friday has reignited the debate.
Müller Wiseman - which cut its own price this week but with 30 days’ notice - said Arla’s three-day notice was “an example of inconsistency in how the voluntary code principles apply across the industry.”
Dairy Crest CEO Mark Allen said “this latest price reduction shows the voluntary code is not working fairly for the British dairy sector - for farmers or processors.”
Arla’s cut was also criticised by the Farmers’ Union of Wales, which said it showed legislation may be needed.
The comments come midway through a review of the voluntary code by an independent panel led by Scottish MP Alex Fergusson, the results of which are due in August.
Some dairy experts have warned that the code is unlikely to survive the review in light of Arla’s cut, as rival processors will have little incentive to continue committing to 30 days.
But NFU chief dairy adviser Rob Newbery insisted that the voluntary code had made a big difference to contractual relationships between farmers and processors, and said Arla’s rivals should use their longer notice periods as a point of difference when recruiting farmers.