Industry bodies have expressed their appreciation for the introduction of new regulations aimed at fostering fairness and transparency within the UK dairy sector.
The Department for Environment, Food & Rural Affairs (Defra) has formulated fresh guidelines enabling farmers to contest the pricing of their produce by supermarkets and other buyers, while also streamlining the process of raising concerns regarding supply contracts.
The National Farmers’ Union (NFU) said the regulations, set to come into force later this year, “mark a significant step forward”.
For quite some time, dairy farmers have voiced their grievances about the lack of equitable treatment they receive from supermarkets, particularly concerning the pricing of liquid milk.
The government’s recently introduced regulations, announced on July 12th and inspired by the Farm to Food Summit conducted in May, aim to foster stability and accountability within the dairy supply chain. These regulations empower farmers by granting them the ability to contest pricing, prevent unilateral contract modifications, and ensure their concerns are heard. The ultimate goal is to establish a more equitable and transparent system for all stakeholders involved in dairy production.
The new rules follow the discussion with industry players, including the NFU and Dairy UK, and the government said it “has listened to feedback from farmers and processors to ensure the new regulations address previous concerns and provide tailored support for those in the industry”.
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.”
In addition, the government is actively working on developing regulations that seek to enhance relationships within the UK pig supply chain.
The introduction of dairy regulations will provide farmers with greater clarity regarding pricing terms. Contracts will explicitly outline the factors that contribute to the milk price, enabling farmers to challenge prices if they perceive a deviation from the prescribed process. This ensures a more transparent and accountable system for determining milk prices.
It will no longer be possible for buyers to impose changes to contracts without agreement.
Farmers’ contracts will also include “clear rules” on notice periods and contractual exclusivity.
An enforcement mechanism will be created to guarantee the regulations are followed.
NFU dairy board chair Michael Oakes said, “These new regulations mark a significant step forward in the government’s efforts to increase fairness and transparency in 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.”
A Dairy UK spokesperson said, “Dairy UK has always believed that this regulation should strike the right balance between greater transparency and maintaining the flexibility the industry needs to compete in a volatile and increasingly competitive marketplace.
“We’ve appreciated the engagement provided by Defra during the development of the regulation. We look forward to seeing the final SI [statutory instrument] and to continuing to work with Defra on the implementation of the regulation.”
