New dairy contract regulations to promote fairness set to be introduced

11 July 2023

An image of the profile of a dairy cow

New regulations promise to empower dairy farmers' negotiating position, helping to ensure fairer prices, transparency and accountability across the supply chain

The government has announced that the regulations will come into force later this year and will enable farmers to challenge prices, prevent changes being made to contracts without farmers’ agreement, and make it easier for farmers to raise concerns.

The announcement was made at this year's Great Yorkshire Show and follows the government’s consultation held in 2020 during which many farmers gave their thoughts on the regulation of dairy contracts, with the industry as a whole calling for change. The government’s response was that they would regulate contracts using powers under the Agriculture Bill.

The development of the regulations has been supported by detailed discussion with key industry players including the NFU and Dairy UK, with NFU Dairy Board chair Michael Oakes describing the announcement as a “significant step forward” in increasing fairness and transparency across the dairy supply chain.

“For a long time, unfair milk contracts have held British dairy businesses back, and these changes will give dairy farmers much needed business security and confidence, as well as helping to share risk along the dairy supply chain,” Michael said.

Dairy UK said the regulation should strike the right balance between “greater transparency” and “maintaining the flexibility the industry needs to compete”.

What do the new regulations mean?

The key takeaways are:

  • Farmers have clearer pricing terms, with contracts setting out the factors which generate the milk price and allowing farmers to challenge prices if they feel this process isn’t being followed.
  • Changes to contracts can't be imposed on farmers without their agreement.
  • Farmers’ contracts will all include a straight-forward way for them to raise their concerns.
  • There will be clear rules put in place on notice periods and contractual exclusivity, protecting the rights of both buyers and sellers.
  • An enforcement mechanism will be created to guarantee the regulations are followed.

'Farmers must be paid a fair price'

Michael Oakes, Dairy Chairman

These new regulations mark a significant step forward in the government’s efforts to increase fairness and transparency in the dairy supply chain.

NFU Dairy Board chair Michael Oakes

Farming Minister Mark Spencer said: “Farmers must be paid a fair price for their produce and these regulations will provide price certainty and stability for farmers by establishing written milk purchase agreements with clear and unambiguous terms.

“This represents a key milestone in our commitment to promote fairness and transparency across food supply chains to support farmers and build a stronger future for the industry, and will be followed by reviews into the egg and horticulture sector supply chains this Autumn.”

The government has said this announcement marks part of a series of supply chain interventions outlined at the Farm to Fork Summit.

The NFU will continue to work with the government and wider industry "not only benefit farm businesses and the supply chain, but the millions of people who value access to quality, sustainable, nutritious British milk,” said Michael.

The SI (Statutory Instrument) on dairy regulations is scheduled to be laid later this year.

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