Ffermwyr llaeth a chwmnïau’n cytuno manylion cytundeb gwirfoddol yn y Sioe
The finer details of the Code will now be finalised by all parties by the end of August.
The Code means that in future, contracts between farmers and dairy processors will be freely negotiated, fairer and more transparent.
Individual farmers will negotiate contracts covering issues including pricing, notice periods and farmers will have the ability to leave contracts more easily if they are unhappy with the price they receive.
Speaking at the Royal Welsh Show where the agreement was reached, Deputy Minister for Agriculture, Alun Davies, said:
"The dairy sector is a key part of the food and farming industry in Wales, and the Welsh Government is working to ensure it has a prosperous and sustainable future.
"I have been involved in recent discussions to support the resolution of the current issues on milk pricing, with a view to ensuring the long term viability of the sector.
"I welcome the news that dairy producers and processors have agreed, here at the Royal Welsh Show, the Terms on a Voluntary Code of Practice on milk supply contracts. I had pushed for a GB wide and industry-led solution, to help ensure a level playing field across the domestic dairy market. Good progress has been made today, and I am confident this step forward can help deliver real change within the sector.
"Industry discussions on the detailed operation of the code will continue over the coming weeks with my support and that of other UK agriculture Ministers. My Ministerial colleagues and I are agreed that it will be essential to keep the Code under review, and I will be looking for independent arrangements to be put in place to provide a suitable arbitration mechanism.
"I will also continue to press the case with the UK Government for the powers of the new Groceries Code Adjudicator to be strengthened.
"I will, as intended, consult on possible draft legislation to implement relevant elements of the EU Dairy Package in the Autumn. I very much hope that legislation will not prove necessary, and that a properly implemented Code of Practice will help achieve greater fairness and transparency in the dairy supply chain - an outcome that is clearly in the interests of all concerned."