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Local dairy farmers see potential in DPO structure

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DPOs: Could play a vital role in efficiency

A GROUP of Welsh dairy farmers are convinced that the Dairy Producer Organisation (DPO) structure should play an integral part in the dairy sector’s future.

The claims come after AHDB Llaeth/Dairy commissioned Promar International to carry out a study into ‘The Feasibility of a Dairy Producer Organisation in Wales’ on behalf of the Welsh DPO working group. The group started to explore the potential of DPOs in Wales in May 2014 with the facilitative support of Agrisgop, which is part of the Farming Connect programme. The aim of the study was to gain a better understanding of how a DPO structure could work for the benefit of dairy farmers and processors in Wales.

DPOs are specific entities set up primarily to negotiate prices and terms and conditions of supply with one or more processors. The report considers the potential of different DPO structures, the Welsh dairy industry and the challenges around establishing DPOs. The working group wants to encourage the industry to ‘stepup’ to the challenge of driving the development of one or more DPOs in Wales.

Working group member Tom Jones said: “As a group we want to see a more resilient, competitive and sustainable dairy industry here in Wales in the future and we strongly feel that DPOs could solve a number of the current issues within our supply chain. “For example there is currently a disconnection between what processors need, and believe they can market, and the level and pattern of farm production. This study goes a long way in acknowledging that by using new and novel methods of working together, DPOs can play a vital role in improving the efficiency of producer/processor relationships for the benefit of both parties.”

Another group member Aled Jones (NFU Cymru member) added: “We hope this evaluation will help farmers across Wales to realise the strength that can be achieved by being part of a DPO. “As an industry we have a choice to make, we can either bury our heads in the sand and wait for the next upturn in the market or we can take this positive step towards rectifying some of the current failures of our supply chain.” The study emphasises that ‘recognition’, ‘cohesion’, ‘patience’ and ‘confidence’ are all fundamental aspects needed to establish successful DPOs. Good ‘leadership’ and relevant ‘skills’ are also cited as critical aspects of any success.