This follows an initial promise to dairy farmers which was made at the Great Yorkshire Show back in July 2023, following previous commitments at the No. 10 Farm to Fork Summit.
It is hoped that the new regulations 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, which allow the Secretary of State to impose substantial financial penalties to entities who make any breaches.
“I am confident that we are finally on the right path to building a stronger, more resilient future for the UK dairy sector.”
NFU Dairy Board chair Michael Oakes
The NFU has long been campaigning for transparent, fair and functioning supply chains. Its five key points for contract reform focused around:
- Pricing mechanisms;
- Relationships and farmer representation;
- Exclusivity and volume management;
- Elimination of unilateral changes and one-sided contract terms, and;
- Consequences of breach
Take a look back at how the NFU has worked on creating fairer, transparent and more resilient supply chains: Dairy contract regulations – how we’re keeping dairy farmers at the forefront
A significant step in more than a decade of campaigning
Outgoing NFU Dairy Board chair Michael Oakes said that the news of the SI (Statutory Instrument) being laid out before parliament “marks a significant step” in a long road of campaigning 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,” he said.
“While progress has taken far longer than any of us hoped and expected, I am confident that we are finally on the right path to building a stronger, more resilient future for the UK dairy sector.”
He also said that producer organisations will play an “important role” in helping farmers to negotiate contracts.
“We will continue to support the development of representative structures like these to help improve trust and collaboration across the supply chain,” he said.
Michael also spoke of the importance of working with the 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”.
Dairy contract regulation – the story so far
Legislation laid before parliament
The 'Fair Dealing Obligations (Milk) Regulations' are laid in parliament.
Dairy contract code
Defra and the devolved administrations develop the dairy contract code alongside industry.
Read: Dairy code announcement comes at ‘critical time’ for producers
Government commits to code
Following feedback from the 2020 consultation which found that unfair practices, linked to buyers having the power to set and modify contract terms and pricing mechanisms without negotiation, “persist” in the sector, creating uncertainty and ambiguity and ultimately instability across the supply chain, the government commits to develop a code.
Read: Dairy code announcement comes at ‘critical time’ for producers
Consultation begins
Defra and the devolved administrations launch a consultation on a new, mandatory code for dairy contracts.
Agriculture Act becomes law
The Agriculture Act (2020) becomes law, giving the UK Government the power to regulate on contracts.
Report highlights imbalance of power
The Groceries Code Adjudicator report highlighted an imbalance of power in the dairy supply chain and the
UK Government recognised the need to legislate dairy contracts.
The new UK Agriculture Bill is developed to replace EU legislation which includes new powers to improve fairness in the supply chain.
NFU calls for greater GCA powers
In the wake of another dairy crisis, NFU calls for extending powers of the Groceries Code Adjudicator to improve fairness in the supply chain.
SOS Dairy
The SOS Dairy campaign sees farmer blockades of supermarkets and widespread protests about milk prices.
The voluntary code of practice for dairy contracts is also developed by farming unions and DairyUK.
Campaign begins
The NFU launches a campaign to improve dairy contracts in the wake of Dairy Farmers of Britain collapse.
Template dairy contract
The NFU launches a new template dairy contract aimed at improving contract terms for farmers.
