Dairy Producer Organisations
Find out what a Dairy Producer Organisation (DPO) is, the benefits of becoming or joining one, and check if you meet requirements.
What is a Dairy Producer Organisation (DPO)?
An organisation formed on the initiative of a group of farmers, which has one or more aims. This includes negotiating contracts for the delivery of raw milk on behalf of its members.
What are the benefits of becoming a DPO?
DPOs can:
- jointly negotiate sales of larger volumes of raw milk than normal competition rules would allow
- strengthen members position in the dairy supply chain
- negotiate a better price for the delivery of raw milk to processors or to a collector
- make sure that production is planned and adjusted to demand, particularly in terms of quality and quantity
- improve production costs and operating margins through:
- sharing knowledge
- sharing of best dairy farming practice
- benchmarking and improved individual farm management
- explore different opportunities in the market
- give better customer service to milk purchasers
Check the DPO requirements
To be recognised, a DPO must:
- be formed on the initiative of dairy producers
- have at least 10 dairy producers (all of them must be separate legal entities) or produce 6 million litres a year (2 producers needed), or both
- be a legal entity or a clearly defined part of a legal entity
- have a specific aim
- carry out activities properly and effectively
- have a statute setting out the requirements
Apply for recognition as a DPO in the UK
If you meet the requirements to become a DPO, you can apply for recognition. You can apply at any time during the year.
You’ll need to register on the Rural Payments service to apply. You must confirm your identity before you can register for the first time. You can do this by telephoning the Rural Payments helpline on 03000 200 301.
Make an application
Once you have registered on the Rural Payments service you can apply using the application for recognition as a Dairy Producer Organisation (DPS1).
RPA will tell you if your application is successful within 4 months of receiving your application and the supporting information needed. If your application is not successful, RPA will explain why.
Check what supporting documents you need to send
As part of your application, you need to send the following information to RPA:
- a list of members and their trading details including:
- names and addresses
- the date they joined the DPO
- holding numbers
- trader SBI numbers, or details of any RPA registration numbers that members already have
- whether the producer is also a member of a cooperative
- a copy of the minutes of the latest Annual General Meeting (AGM), Extraordinary General Meeting (EGM) or board meeting, if applicable
- approximate marketable production volumes each year (in litres)
- proof that the DPO is a legal entity or a clearly defined part of a legal entity: this could be a copy of a Certificate of Incorporation (or equivalent under the Co-operative and benefit Act 2021)
- copies of the Memorandum of understanding or Articles of Association giving information about the legal constitution and rules of the organisation
- signed copies of the Members Agreement showing that members only belong to one DPO
- DPS8 - Authorisation form
- a requirement for members to apply the rules stated by the DPO
- a requirement that members to belong to only one DPO unless approved by RPA
- a rule requiring members to give information asked for by the DPO for statistics
- procedures for making and amending the rules of the DPO
- details of members’ financial contributions to finance the DPO
- rules allowing members to review the DPO and its decisions
- penalties for breaking DPO rules, in particular non-payment of financial contributions
- rules on accepting new members
- minimum membership periods, if any
- resignation procedures for members
- rules on budgets and accounting for running the DPO
- agreement on action to be taken in case of force majeure
- rules on dissolving the DPO
You will need to have evidence that the DPO:
- has a specific aim
- is able to carry out activities effectively over time
If the DPO intends to negotiate contracts for the delivery of milk on behalf of its members, it must also:
- show how the price will be negotiated and the contractual relationship between the DPO, its members, and any purchasers
- give details of whether the DPO intends to take ownership of the milk before selling it to other purchasers, or will act only to negotiate on behalf of its members
- make sure that any negotiations do not include milk covered by a separate DPO or a cooperative
Recognised DPO
Once recognised, a DPO may negotiate on behalf of its members, sales of or contracts for delivery of raw milk to a processor or collector every month. This may be for all or part of the production of their members.
The negotiations may take place:
- whether or not there is a transfer of ownership of the raw milk by the farmers to the DPO
- whether or not the price negotiated is the same as regards the joint production of some or all the farmer members
- provided that, for a particular DPO:
- the volume of raw milk covered by such negotiations which is produced does not exceed 33% of the UK’s total national production, and
- the volume of raw milk covered by such negotiations which is delivered does not exceed 33% of the UK’s total national production
- provided that the farmers concerned are not members of any other DPO which also negotiates such contracts on their behalf; this can be allowed on application to RPA in cases where farmers hold two distinct production units located in different geographic areas
- provided that the raw milk is not covered by an obligation to deliver arising from the farmer’s membership of a cooperative in accordance with the conditions set out in the cooperative’s statutes or the rules and decisions provided for in or derived from these statutes
Negotiation ceilings are calculated taking into account the delivery period of the raw milk covered by contractual negotiations and the seasonal variability in milk production, where that variability is significant.
Even where these thresholds are not exceeded, the Competition Markets Authority (CMA) may intervene in an individual case to prevent a negotiation from taking place or require it to be reopened if it considers that this is necessary to prevent competition being excluded or to avoid seriously damaging Small Milk Enterprises (SME) processors of raw milk in its territory.
Negotiations in the UK may start as soon as the DPO has completed and lodged form DPS10 with the CMA.
Joining more than one DPO
If you have holdings in different geographic areas, you can confirm to RPA that you wish to become a member of a separate DPO for each holding.
The role of the Competition and Markets Authority (CMA)
The CMA is the competent competition authority for all of the UK. Their role is to promote competitive markets and tackle unfair behaviour.
The CMA can intervene in negotiations to prevent competition being excluded, or in order to avoid serious damage being caused to processors of raw milk.
Continuing to meet recognition requirements
You must keep records and continue to meet the rules to keep recognition status. You must notify RPA and the CMA of any changes which could affect the legal status of the DPO.
You must also keep records of any deliveries and sales of milk and provide these to RPA and the CMA. These must be supported by original documents.
Mergers of Recognised DPOs
DPOs may want to merge with other recognised DPOs for many reasons. RPA cannot advise DPOs whether a merger is the right thing to do for their organisation. It is strongly advised that all DPOs considering a merger should consult RPA at an early stage to discuss plans.
If the head office of the newly merged group is in the UK, the group will need to apply for recognition on application form DPS1 and provide the supporting information under Apply for recognition as a DPO in the UK. It should also send RPA a copy of the minutes of an AGM or EGM covering the agreement to merge. The merged group will also need to register with RPA.
Changes to statute or Articles of Association
DPOs must tell RPA about any changes that could affect recognition such as changes to the statute or Articles of Association.
Changes to membership of the DPO
DPOs must use form DPS12 to notify the CMA of any changes to membership of the DPO within one month of the change.
Estimate of expected volumes
Before starting negotiations for delivery of raw milk to processors or collectors, you must fill in and lodge a DPO Negotiation Return (form DPS10) with the CMA. This confirms an estimate of your expected volume of production and expected timescale.
Actual volumes delivered
By 31 January each year, you must confirm the actual volume of raw milk delivered by the DPO in the previous calendar year. To do this, you need to fill in and send the DPO Annual Contract Negotiation (statistical) Return (form DPS9) to the CMA.
Keeping records
DPOs and their members must keep records of all deliveries and sales of milk. You must present these to RPA or the CMA if requested, supported by original documents.
You need to keep all records for 3 years from the end of the year to which they relate.
Withdrawal of recognition
DPO recognition may be withdrawn if:
- you don’t meet record keeping requirements
- you don’t meet recognition requirements
- you give false or misleading information
Voluntary termination of DPO status
Recognised DPOs must notify RPA in writing if you wish to cancel your recognised status. This letter should give an explanation why, include the date this will take effect and confirm that you will fulfil your obligations as a DPO up to that point. This includes completing form DPS9 for the year in which recognised status is cancelled.
Making a complaint
If you’re unhappy with a decision or with the service provided by RPA, read our complaints procedure on GOV.UK.
Contact
Email: [email protected]