The model milk contract launched last week by the NFU and NFU Scotland could destabilise the industry and lead to shortages for processors, critics have warned.
Farmers' leaders have billed the proposals as an opportunity to make contracts clearer and more flexible and bring greater fairness to the relationships between milk producers and purchasers.
The new contract would allow farmers to set prices for a fixed period of time, sell to multiple buyers and enter contracts as short as three months versus the current norm of 12 to 18 months, they said.
However, milk buyers warned that the new shorter contracts could destabilise the industry, push prices up and discourage supermarkets from forging closer links with dairy farmers.
"To create a world-class dairy industry we need integrated supply chains where suppliers and their customers can work together and develop strong relationships. For this to work, we need a degree of stability in terms of contracts," said Dairy UK director-general Jim Begg.
"Nobody would benefit from injecting instability into the marketplace. The current contracts have evolved to sustain the commitment chains have made to the sustainability of dairy farmers; the continuity co-ops need to realise their long-term ambitions; and the stability all dairy processors need to develop value-added markets."
However, the NFU said the contract needed to be reviewed given the dangers of further market volatility and likely ending of milk quotas in 2015.
The contract was still a work in progress, it stressed. "This is not an end product, it is a flexible framework to improve contracts where elements can be added or taken away," said Tom Hind, NFU dairy adviser.
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