22nd December 2017

Collaboration not negotiation path to fairer supply chains

Building better relationships and fairer prices for farm products comes from supply chain collaboration rather than negotiation, so said dairy farmer Rory Christie at the recent Lothians Monitor Farm meeting.

Rory was describing his experience setting up the Milk Suppliers Association (MSA), a co-op which supplies Lactalis and has secured the first negotiated milk price contract since the Milk Marketing board was disbanded.

He said: “It was through working with Lactalis that we were able to secure a negotiated contract, rather than a discretionary one, and it was through our collaborative work we helped secure significant cheese contracts, which are hugely important for local suppliers and the community.

“But we didn’t get there through blaming the big companies for not paying us enough, or taking an adversarial approach. We recognised we had very little power which meant there was little to be gained from negotiating. Instead we got there through starting discussions and working out how we could work together to benefit both parties.”

Stephen Young, who works with SAOS, agrees that collaboration is the way forward. “What we need to be asking our customers is ‘what do you need from us that allows you to pay us a premium?’ and then we can work on how to supply it. That is what the Milk Supply Association has done, as well as other successful co-ops like OatCo.”

But developing those relationships isn’t easy and takes time and perseverance. Rory and his colleagues have spent three years working on a supply management system which aims to bring long term stability and decrease volatility.

He says: “This system ensures the MSA’s milk volume is pooled so that we are viewed as one farm rather than 143. We agree a production limit, we will only take a hit if we overproduce and it will be up to us as farmers to guard against that.

“I’m nervous about it, but it should protect individual farmers and help the company balance supply and demand, a win-win for each side.

“It takes a long time to work out systems like this which benefit producer, processor and retailer, and you need to be exceptionally determined, but it is worth it.”

Monitor farmers Bill Gray and Peter Eccles both recognise the value in developing relationships with the supply chain.

Peter says: “Working more closely with the supply chain in developing niche premium products would be really exciting, it is an area I am particularly passionate about and wish to explore. Understanding what the market wants and delivering such products consistently to specification would be the challenge. By working cooperatively with other farms we could develop ways to ensure our target market is supplied 12 months of the year, removing the need for one business to supply all year round.”

The Lothians Monitor farm is a partnership between neighbouring farms Saughland and Prestonhall. It is one of nine new monitor farms established in Scotland as part of a joint initiative by Quality Meat Scotland (QMS) and AHDB Cereals & Oilseeds with funding from the Scottish Government. The aim of the monitor farm programme is to help improve the productivity, profitability and sustainability of Scottish farm businesses.

For more information about the monitor farm programme visit www.monitorfarms.co.uk

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