Delivering on commitments made at the Farm to Fork Summit held earlier this year, the government has outlined new regulations for the dairy industry to ensure that supply contracts are fair and transparent.
The developments have been supported by discussions with key industry players, including the NFU and Dairy UK, and the government states that it has taken onboard feedback from farmers and processors to ensure the new regulations address previous concerns and provide tailored support.
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.”
As part of the regulations, contracts will include clearer pricing terms, setting out the factors which generate the milk price and enabling farmers to challenge prices when the process is not followed.
Changes to these contracts cannot be imposed on farmers without their agreement, which the government says will encourage dialogue between parties and improve trust in the supply chain. There will also be straightforward ways for farmers to raise concerns.
Clear rules will be put in place on notice periods and contractual exclusivity to protect the rights of both the buyers and the sellers and remove ambiguity from contracts.
The government will also put in place an enforcement mechanism to guarantee that regulations are followed.
These new regulations are part of a series of supply chain interventions confirmed by the government at the Summit, with new reviews to begin this autumn for the egg and horticulture sector. It was announced in April that regulations are also been developed to improve the pig supply chain.
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.
“This announcement signals that we are on the right path to building a stronger, more resilient future for the British dairy sector. We will continue to work with the government and wider industry to not only benefit farm businesses and the supply chain but the millions of people who value access to quality, sustainable, nutritious British milk.”
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 and to continuing to work with Defra on the implementation of the regulation.”