The dairy sector’s code of best practice is ‘fit for purpose’, according to an independent review into the voluntary guidelines for contractual agreements in the industry.
Delivering his much- anticipated verdict on the state of the code, review chairman Alex Fergusson MSP was “strongly of the view” that it holds the key to addressing any dairy supply issues.
Publishing his final report and recommendations, he said he had spent considerable time appreciating the “differing relationships” in the dairy sector and was well aware of the challenges faced.
“Having done so, I am strongly of the view that the code already holds the key to addressing many of the concerns that were raised with me,” he said.
“It is, however, vitally important that everyone involved in the sector be they producer or purchaser fully understands the code so that they can use it in the positive and constructive way in which it has been drawn up.”
“I am deeply grateful to all those individuals and organisations who took part in this review, and for their patience and understanding over the length of time it has taken.”
However, trade body Dairy UK said differing levels of contractual notice periods continue to cause insecurity in the milk supply chain.
“When the VCOP (voluntary code of practice] was established it was agreed it would be reviewed annually to ensure that it worked well for all parties,” said Dairy UK chief executive Dr Judith Bryans.
“Given the diversity of dairy businesses that Dairy UK represents, and the need to have a level playing field for businesses within the industry, we can only accept those recommendations where there is consensus amongst our membership.”
In particular, she said the trade body welcomed Mr Fergusson’s recommendations on the good practice clause, as well as early termination/liquidation of damages and exclusivity.
“However, recommendations where there is not consensus amongst our members remain a problem,” she stressed.
In particular, the issue of differing levels of notice periods risks “creating a division within the industry”.
She said: “Long term, disparity around security of supply will not be helpful in attracting investment into the industry.
“We are continuing dialogue around aspects of the voluntary code with the farming unions going forward.”