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Dairy UK said today it supports government proposals to extend the remit of the Groceries Code Adjudicator (GCA) to cover smaller retailers and the food service.

In a submission to the Department for Business, Energy & Industrial Strategy consultation on the issue, Dairy UK said the GCA has had a positive impact on commercial relations in the groceries markets. There is a case for extending the GCA’s remit to smaller retailers and the food service sector as these retailers ‘can exercise significant market power with smaller suppliers and the food service sector is of growing importance’.

However, Dairy UK firmly believes the GCA’s remit should not be extended to cover relations between dairy farmers and milk purchasers.

Dr Judith Bryans, Chief Executive of Dairy UK, said: “We fully support an extension of the GCA’s remit to smaller retailers. Yet giving the GCA any role in regulating contractual relationships could lead to the GCA becoming the focal point for price disputes throughout the industry. This would be unwarranted as there is no systemic failure in the UK market.”

In its submission, Dairy UK states UK dairy markets are operating efficiently and do not operate outside European norms. In most regions of the UK, the market for raw milk is competitive without any one purchaser being able to exercise market dominance. As a result, there are no instances of milk purchasers being able to set prices that are in opposition to the prevailing market trend.

Dairy UK also highlights that price volatility is an inherent feature of deregulated agricultural commodity markets. Globally, the degree of price volatility experienced in the UK is entirely consistent with other EU Member States and other major milk producing countries. There is also a high level of price transparency consistent with the needs of competing companies to protect commercially sensitive information.