WELSH processors and producers must work closer ahead of Brexit, the Welsh Dairy Show in Nantyci, Carmarthen was told as it opened on today (Tuesday, October 24).

A collaborative, trusting and transparent relationship between dairy processors and producers in Wales is more important than ever before in light of the uncertainty surrounding Brexit.

With milk prices on the rise, there’s no doubt that this year’s show will see milk producers in a more upbeat mood than they were 12 months ago. However, with Brexit drawing closer and the open-sided nature of many milk contracts skewed towards the processor, these are still uncertain times for the dairy industry in Wales, says the NFU.

NFU Cymru milk board chairman Aled Jones said: “With Brexit looming large on the horizon, now is the time for milk producers to take stock and look at their relationship with their milk purchaser.

“The introduction of dairy producer organisations (DPOs) is something that NFU Cymru has supported for a long time now, and we believe that advocating the right producer representation could pave the way for producer organisations here in Wales, where appropriate.

"Presently most of us deal on an individual basis with our processors but, long-term, I think that we are far stronger if we speak as one voice. For some, DPOs could bring longer term contracts providing better security – we are already seeing five-year contracts in place in Ireland.

“I would also urge all buyers to provide options in their contracts to help producers manage milk price risk. I would like to see more opportunity for forward contracts for all or part of annual milk production to protect against volatility and provide certainty on price and volume for both producer and processor.

"There is also an opportunity for the futures market as a price smoothing mechanism. It is encouraging that some dairy companies have started on these routes but we need more to do so.

“For this to work, we need improved transparency and accurate up-to-date milk price reporting mechanisms. We require the support of Government to put a mandatory mechanism in place covering both milk price and volumes.”

Mr Jones also talked about the wider challenges and opportunities facing the industry as a result of the UK’s impending departure from the EU.

“We are not clear yet what Brexit will bring, but on trade there is a huge opportunity to displace imports and expand exports. That will, however, require a step change from the current situation and an increased focus on added value processing here in Wales and across the UK. I would dearly wish to see investment in more processing capacity for added value in the milk fields of Wales.

“Despite the current uncertainty surrounding Brexit, there are opportunities for the Welsh dairy sector. I believe that our climate and rainfall will increasingly make us a favoured area for milk production as climate change impacts on global production systems. To grasp these opportunities we need to see close cooperation and improved collaboration across the supply chain and contracts in place that help give producers greater certainty, clarity and security over milk price.

“Our Governments in Cardiff and Westminster also have a crucial role to play in making sure we have continued access to export markets and the right policy framework to support a productive, progressive and profitable dairy industry in Wales.”