The new code for the sector will seek to provide a guiding framework, establishing minimum standards and providing businesses with the flexibility to adapt contracts to their individual circumstances.
The announcement by the UK government and the devolved administrations to put the Code of Conduct into legislation follows Defra’s 12-week consultation on Contractual Relationships in the UK Dairy Industry, which sought views from dairy farmers and processors about how dairy contracts and relationships could be improved.
Read the government’s announcement summary from the NFU.
NFU helps instigate change
In a joint statement, dairy farmer representatives of the four UK farming unions have said:
“For too long, dairy farmers have borne far too much of the risk in the dairy supply chain and inappropriate contract terms are often at the root of the problems. Contracts have been weighted too heavily in favour of the milk buyer who can change terms and pricing mechanisms, and even introduce price cuts without negotiation, while locking farmers into changes without recourse.
“The UK farming unions have been fighting for years to change the structure of how the dairy sector operates. We want more sustainable, progressive and equitable relationships between farmers and processors, so we can collectively tackle the issues we face. This is all the more crucial as we build back from the impacts of Covid-19 and work towards new trading arrangements outside the EU.
“We have been monitoring closely how contracts work around the world. Although we recognise that our dairy market has some differences, for example compared to Australia, we think there are lessons we can learn in building our own model. Even within the UK, there are clearly markets operating in different ways, such as Northern Ireland, and this will need to be taken in to account when designing the new code.
“Although we are delighted with today’s announcement, this is only the beginning. We must now work hard to ensure we get this new Code of Conduct right and that it works. We hope the whole industry will take on board the results of the government consultation and work collaboratively to find a positive way forward. It’s essential that the UK dairy market is fit for purpose for all parts of the supply chain, supporting innovation and resilience in UK dairy, and supplying quality dairy products for the public to enjoy.”