New regulations governing fairness in the dairy supply chain laid in Parliament

New regulations will be laid in Parliament today aiming to ensure fair and transparent contracts for dairy farmers, ahead of similar regulations for the pig sector expected to be introduced within the next few months. 

The new regulations will establish transparency and accountability across the dairy supply chain by stopping contract changes being imposed without agreement. There will be a system in place to enable farmers to verify the calculation of variable prices.

The regulations also include an enforcement regime, backed up by the ability for the Secretary of State to impose substantial financial penalties in respect of any breaches. Defra said the regulations will mean clearer pricing terms for dairy farmers.

The process of developing regulations for the dairy supply chain commenced in 2020, long before the process for the pig sector got underway in July 2022, but Farming Minister Mark Spencer confirmed recently that Defra is aiming to have the pig supply chain regulations in place by the summer.

Speaking at the NFU Conference yesterday, Prime Minister Rishi Sunak said the Government was determined to deliver on its promises to deliver fairness in the supply chain.

“We’re determined to have a supply chain that is fair – this is a plan that we set out that we’re sticking to.  Tomorrow we will be laying the regulations in the dairy sectors and then we’re moving onto pigs and poultry and eggs.

“We’re laying the regulations to ensure that we do have that fairness and transparency because that is what you deserve and it’s what we need if we believe in a sustainable future for farming.”

Defra is also launching a review to improve fairness in the poultry supply chain today.

An industry-wide consultation in 2020 found unfair practices within the supply chain linked to buyers having the power to set and modify the terms of a contract with no negotiation with the producer and little notification.

The UK’s farming unions welcomed the new dairy regulations. NFU dairy board chair Michael Oakes said: “It became clear to us back in 2012 that the voluntary code of practice still left many dairy farmers open to unfair practices and abuses of power, so today marks a significant step in a long road of campaigning by the NFU and the other farming unions 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. While progress has taken far longer than any of us hoped and expected, I am confident that, from today, we are finally on the right path to building a stronger, more resilient future for the UK dairy sector.”

NFU Scotland milk committee chair Bruce Mackie said: “For too long, dairy farmers have had very little influence or power with regards to the terms under which they sell their milk, but they now have an opportunity to come together and make the most of what this legislation offers by way of strengthening their hand.”

Ulster Farmers Union dairy chair Kenny Hawkes said: “It is a major milestone following years of immense lobbying alongside the UK unions, that new legislation is being laid in Parliament today to achieve more fairness and transparency in the dairy supply chain.”