The EU Commission must increase intervention prices as a short term measure to mitigate the impact of volatility on the dairy sector, according to an All Party Political Grouping (APPG) within the Westminster Parliament.
The grouping published its report assessing the future challenges facing the UK dairy sector earlier this week.
APPG members believe that as private mechanisms to help smooth volatility are not yet well developed in the UK, short-term measures are required to help stabilise the market and alleviate pressure on dairy farmers.
In the short-term this means the EU playing a residual role in minimising extreme downward price volatility, through intervention purchasing at a higher reference price.
The APPG is encouraging support for industry efforts to explore new ways to mitigate the impact of volatility, including the development of futures markets. Members claim that futures markets could help deliver greater stability for farmers as prices can become more stable, with fewer variations from low to high.
Group members have welcomed the UK government’s announcement to lay a statutory instrument before Parliament to allow the grocery code adjudicator to levy substantial fines on any retailer that is found to be in violation of the Grocery Supply Code of Practice.
To give confidence to farmers that they are receiving a fair deal, APPG members want the government in London to examine the practicality of extending the adjudicator’s remit down the supply chain.
Liz Bowl, head of farming with the Soil Association confirmed that her organisation welcomed the report, especially given the current market volatility.
“However it missed some opportunities to secure a truly sustainable future as no recommendations to underpin further improvements in supply chain sustainability at farm level were included,” she said
“We seem to be sleep walking into a future where ever greater numbers of dairy cows are being housed 24/7, fed on diets with increased proportions of concentrates to support the higher levels of milk production whilst grass, the cheapest feed available, is being consigned to loafing paddocks for dry cows only.”