In response to ongoing campaigning by the UK farming unions, the government held an industry-wide consultation in 2020 which found unfair practices within the supply chain linked to buyers having the power to set and modify the terms of a contract with no negotiation with the producer and little notification.
The new regulations, a commitment set out at the Prime Minister’s Farm to Fork Summit last year, will establish transparency and accountability across the dairy supply chain by stopping contract changes being imposed without agreement. There will also be a system in place to enable farmers to verify the calculation of variable prices. The regulations also include an enforcement regime, backed up by the ability for the Secretary of State to impose substantial financial penalties in respect of any breaches.
NFU dairy board chair Michael Oakes said: “It became clear to us back in 2012 that the voluntary code of practice still left many dairy farmers open to unfair practices and abuses of power, so today marks a significant step in a long road of campaigning by the NFU and the other farming unions to improve fairness across the supply chain.
“For a long time, unfair milk contracts have held back many UK dairy businesses, and these changes will help give dairy farmers much needed business security and confidence. While progress has taken far longer than any of us hoped and expected, I am confident that, from today, we are finally on the right path to building a stronger, more resilient future for the UK dairy sector. Notwithstanding the progress that is being made, the NFU believes that representative organisations, such as producer organisations, will play an important role in helping farmers negotiate contracts within the dairy sector and we will continue to support the development of representative structures like these to help improve trust and collaboration across the supply chain.
“We will continue to work with government and the wider dairy industry to not only benefit farm businesses and the dairy supply chain, but the millions of people who value access to quality, sustainable, nutritious British milk and other dairy products on a daily basis.”
Other UK farming union comments:
NFU Scotland milk committee chair Bruce Mackie said: “NFU Scotland and the other farming unions have been pushing for contract reform since 2011 and welcome the bringing forward of legislation to regulate dairy contracts. This has been a key ask of the industry for many years. There will be a long road ahead and statutory contract legislation on its own will not solve all our problems.
“However, for too long, dairy farmers have had very little influence or power with regards to the terms under which they sell their milk, but they now have an opportunity to come together and make the most of what this legislation offers by way of strengthening their hand.
“We will continue to work with the UK Government, other farming unions and the dairy industry in supporting our dairy farmers using this legislation to make their businesses more sustainable, progressive and create fairness in the supply chain.”
Ulster Farmers Union dairy chair Kenny Hawkes said: “It is a major milestone following years of immense lobbying alongside the UK unions, that new legislation is being laid in Parliament today to achieve more fairness and transparency in the dairy supply chain.
“The new regulations will go a long way to enhancing the position of the primary producer by establishing a legally binding, minimum standards of contractual practice, while also providing businesses with much needed certainty in terms of their supply agreement with processors. It will help to build a stronger, more resilient future for the Northern Ireland dairy sector, so farming families can continue to produce high-quality milk.”
NFU Cymru dairy board chair Jonathan Wilkinson said: “The introduction of this legislation represents a massive step forward and is a once in a generation opportunity to change the way the dairy supply chain operates. The additional transparency and accountability introduced by these regulations will benefit the whole supply chain and provides additional certainty to farmers as to the terms under which they sell their milk.
“We are ambitious for the future of farming in Wales, and NFU Cymru, alongside the other UK Farming Unions, will continue to work with government and the wider supply chain to ensure these regulations deliver not only for Welsh dairy farmers, but the millions of consumers around the world that enjoy our climate friendly and nutritious milk.”