Farmers supplying the Saputo mozzarella factory at Newcastle Emlyn will only have to give three months notice if they intend to quit, after the company announced it would become the first milk processor in the UK to reduce its severance period.

Saputo, which is looking to increase production at the plant, says reducing the severance period from 12 months will bring flexibility to its agreement with farmers.

Factory manager Campbell Appleton says the company is actively recruiting new suppliers and believes it will win farmers over with the new contract terms.

“The primary reason for reducing the notice period is to remove any fear farmers may have about joining a new company,” says Mr Appleton.

“We want to redress the balance of power between producer and buyer to facilitate a more trust-based relationship. We have demonstrated real action on this by cutting the notice period to three months.

“Saputo values its farmer suppliers and as such we don’t want to be in a position to hold them to ransom. We believe the new notice period will take away some of the concerns of signing a new contract, it will make it less onerous and fairer across the board.”

The new contract, which applies to existing producers too, has already attracted new suppliers.

Huw Williams, who farms near the factory and was a First Milk member, has just signed up.

“I like the flexibility of the new contract, as farmers it gives us more control,” says Mr Williams, who produces 2000 litres daily at Penllwyncoch, Felindre.

From July 1st Saputo’s standard milk price will rise by 0.50ppl, taking it to 24.30ppl. This will be the third price increase in three months.

Despite volatility in the market, Saputo has continued to invest in the Newcastle Emlyn factory and has plans for further investment. It also wants to increase production at the site.

“As a business we want to find the most profitable supply volume. We are looking for suppliers big and small, we will not turn milk away,” says Mr Appleton.

The factory produces mozzarella and other cheeses for the food service industry, industrial clients and restaurants.