NFU seeks to promote dairy Producer Organisations in Britain
THE NFU is taking the first steps towards increasing participation in milk Producer Organisations (POs) in Britain.
The union has published a ‘Dairy and Producer Register Form’ in order to collect details of farmers who are interested in forming a POs.
POs allow groups of farmers to come together to market their milk collectively, with elected representatives negotiating prices with milk buyers on their behalf.
NFU dairy adviser Luke Ryder said they could change the way the dairy market operates by giving more clout to farmers in the marketplace.
“POs are about consolidating milk and negotiating bigger volumes, for example, 100 million litres as a group rather than 1.5m as an individual. They offer other benefits, such as collective research, legal advice and training and skills,” he said.
The NFU’s Dairy and Producer Register Form will collect contact details of interested farmers, including NFU members and non-members, plus other relevant data such as milk supply details to give like-minded the chance to come together in this way.
Mr Ryder said the information would be used to organise local meetings to discuss the issues surrounding setting up POs, such as the relevant EU legislation and legal advice.
The EU Dairy Package, agreed earlier this year, allows farmers to form producer organisations representing a maximum of 33 per cent of the UK dairy market or 3.5 per cent of the EU market.
But the UK has been relatively slow to go down this route compared with some other member states and the ‘dairy coalition’ of UK organisations campaigning under the SOS Dairy banner has identified the establishment of POs as a means of boosting farmers’ market power.
Mr Ryder said POs were likely to be most attractive to farmers who are not already members of co-operatives and are not on aligned contracts experience.
While some people see POs as an opportunity to develop large groups supplying big chunks of the market, Mr Ryder said experience had shown there was a ‘critical limit’ when they became too big.
He said the NFU started this process on behalf of all dairy farmers and now ‘required the help of all stakeholders and their members to see it become a success’.
He said the NFU was exploring how the £5 million of Government funding made available to help producer groups improve their competitiveness, recently announced by Farming Minister Jim Paice, could be utilised towards this end.
Dairy UK director general Jim Begg said farming organisations were right to look into promoting POs, which he said were ‘absolutely fine as long as there is competition protection’ for milk buyers.
“I think it would be a disincentive for dairy companies to invest in certain areas if there was only one person to come forward to sell milk.It is important to maintain investment going forward,” he said.
“There is lots of political support for there to be a shift in the balance of power but I think big producers might not fancy membership as people who take risks prefer to be rewarded for their own efforts whereas POs tend to operate around the average. That has certainly been the case in other countries where there has been a drive to establish POs,” he said.
The NFU’s Dairy and Producer Register Form can be accessed here: http://www.nfuonline.com/News/Our-Dairy-Form-and-Producer-Register