Arla Foods is leading the industry by launching what it believes is the first milk supply contract fully compliant with all aspects of the Dairy Industry Voluntary Code of Best Practice on Contractual Relationships.
The new ‘Arla Direct’ contract features liquid and compositional variations, a volume bonus for larger producers, seasonality options and a 12 month notice period with the three month trigger as specified in the Code. It has been launched as part of the cooperative’s recruitment drive to secure an additional 500 million litres of milk in the UK and is being offered at a standard litre* price of 30.02ppl.
Commenting on the launch of the contract Ash Amirahmadi, Arla’s head of milk and member services comments: “We believe this contract offers dairy farmers in England, Scotland and Wales, who aren’t already supplying Arla, a long-term premium milk price and the security of supplying milk to a farmer owned cooperative that is investing in the future of the industry.”
The concept for the contract was first announced last September as part of the cooperative’s milk sourcing model which pledged to offer a range of contracts to meet producers’ needs.
It puts Arla in the position where it is able to recruit via two contracts: the new Arla direct contract and an Arla Foods Milk Partnership (AFMP) contract. Farmers who aspire to be members of Arla Foods amba, at some point in the future, should choose AFMP’s shared ownership model. Alternatively, the new Arla direct contract is available for those who want to supply Arla but would prefer a direct supply option.
Ash Amirahmadi comments further: “Since its launch in September, there has been plenty of debate around the Code and Arla is fulfilling its commitments by introducing what we believe is the first fully compliant milk supply contract. Initial reaction from farmers has been extremely positive.”
“In addition, we are also working to ensure that all of our farmer contracts are fully compliant with the Code.”
Proposals for the terms on which existing farmers can transfer will be discussed democratically with the elected representatives of Arla Milk Link and Arla Foods Milk Partnership, early in the spring.
*Standard litre of 4% butterfat, 3.3% protein, one million litres, top bands of hygiene, including transport charges