THE review of the Voluntary Dairy Code of Best Practice (VCOP) published seven key recommendations this week.

Alex Fergusson, MSP, who chaired the review, said he had been surprised by the apparent lack of interest in the review by individual producers and other representative groups.

"It suggests that the potential benefits that can be gained by embracing the Code are not fully appreciated throughout the dairy sector," he said.

The code was introduced in 2012 to try and end conflict between producers and purchasers through dialogue and transparency.

Mr Fergusson said a major weakness of the VCOP was that it had not been embraced or understood more widely.

He put forward seven recommendations: -

o notice of termination – no change required;

o notification of price change – the Code should clarify that a 30 day notification of a price change is only required in the case of a price decrease;

o a Good Practice clause should be written into the code to ensure a producer is fully aware of the details of any new contract they are considering. No producer should be put under undue pressure to sign a new contract;

o Early termination/payment of liquidated damages – a change to the wording of clause 6.3 to read “where the contract allows either party to terminate…of liquidated damages, the payment to be made etc.”

o Exclusivity – the code should be amended to state that where a producer wishes to expand production, the purchaser should be given the first opportunity to purchase it.

The contract must allow the producer to supply others where the purchaser does not want to buy the additional milk under the same terms and conditions; the purchaser wishes to subject the producer to defined volumes, which would place a ceiling on the total volume of milk to be delivered within a 12-month period, after which the producer would be subject to penalties.

Where the producer is given a non-exclusive contract, then the minimum obligation on the producer would be for separate bulk tanks to be made available for each purchaser being supplied, unless agreed otherwise by the parties.

o Wider adoption of the code – Dairy UK, the NFU and NFUS should help improve understanding and knowledge of the code, explaining the benefits and advantages that have been experienced by producers and purchasers. They should also explore the possibility of expanding the code to include retailers.

o Ongoing dialogue – DUK, NFU and NFUS should meet at least every six months to review progress.

Mr Fergusson said: "The VCoP was introduced partly as a result of the desire to have a voluntary code rather than a compulsory one under the EU Dairy Package. I am of the opinion that a voluntary code should remain the preferred option."

Dr Judith Bryans, chief executive of Dairy UK, welcomed the recommendations on the good practice clause, early termination/liquidation of damages and exclusivity.

However, the differing levels of notice periods had created a security of supply issue for some members and risked creating a division within the industry.

Dairy UK would continue discussing aspects of the code with the farming unions.

o Meurig Raymond, NFU president, this week said support for British dairy farmers from public, processors, retailers and government was vital after the fall in farm gate milk prices.

He said the current times were "extremely worrying" for farmers and said: "These are extremely turbulent times. That is why it is absolutely vital that everyone in the dairy supply chain shows commitment at this time. Milk processors, retailers and dairy farmers must work together to minimise the impact of the current price falls on dairy farmers and look to the future by opening up new markets for milk and creating new products."