Milk contract template ‘very encouraging’

A milk contract template launched this week by NFU and NFU Scotland has prompted “very encouraging” initial feedback from producers round the country.

Speaking at AgriScot in Edinburgh on Wednesday Tom Hind, NFU chief dairy adviser, said the objective of the model contracts was not confrontational.

“In fact we are trying to solidify relationships between farmers and milk buyers and produce contracts which are fair.

“The contracts are not about farmers walking away, settling old scores or fixing the market,”
said Mr Hind.

Buyers have been “sitting pretty for a number of years”, he said, but the climate has now changed.

“Dairy farmers have never been in a better position to get better contracts in place,” he added.

Work on the project started in February having been triggered factors including concern existing contracts are too complicated and farmer understanding of the contents is, in some cases, poor.

“The rights and obligations in milk contracts are too heavily weighted in favour of the buyer, people are currently considering signing contracts with new buyers and there is also the impact of the impending ending of milk quotas,” Mr Hind said..

The Union contracts clarify six major points:

• who the contract is with (clarity on parties, credit and registered company check)


• contract duration


• exclusivity (could farmers consider a fixed value contract allowing them to sell to another buyer?)


• price and price determination


• assignment and testing

The latter could introduce standardisation of testing procedures and an appeals process.

Informal feedback from milk buyers has been fairly positive though they have flagged up challenges, said Mr Hind.