New Fair Dealing Obligations (Pigs) Regulations have been signed into law by ministers, with the intention of ensuring pig farmers get a better deal with greater fairness and transparency across the pig supply chain.
Under the legislation, all new pig supply contracts will need to be in writing by default, with clear terms on pricing, volume and dispute resolution. Crucially, any changes to terms must now be agreed by both parties.
The Statutory Instrument (SI) has reached the statute book, after passing through the Houses of Commons and Lords without amendments to the draft SI.
According to NPA senior policy adviser Tom Haynes, the legislation should be in force by mid-August, from when it will apply to all new contracts. There will be a 12-month transition period for existing agreements until August 2026, after which all such contracts will need to be compliant with the Regulations.
Defra said the new legislation would bring in stronger relationships between buyers and producers, improving consistency, predictability, and resilience throughout the supply chain and protecting UK businesses and long-term food security, as well as support longer term planning.
Key elements of the regulation include:
- The pig purchaser must use a written ‘pig purchase contract’ that complies with these Regulations when purchasing pigs from a qualifying seller.
- The duration of the pig purchase contract must either be fixed or evergreen, ie it will continue until one of the parties terminates it.
- Pig purchase contracts must use either a fixed or variable price, or a combination of both. The SI sets out in detail how these should be set.
- There is a provision to review the price in ‘exceptional market conditions’.
- A key element of the regulation is in relation to the supply of contracted pig numbers for both buyers and sellers. This includes provision as to remedies available to the purchaser when pig numbers fall below the minimum quantity specified in the contract.
- There is a requirement for pig purchase contracts to contain force majeure clauses in relation to the collection or delivery of pigs for purchasers and sellers.
- Another important provision requires pig purchase contracts to contain a dispute resolution procedure and the SI sets out how this will work.
- In June 2024, the government appointed an Agricultural Supply Chain Adjudicator (ASCA) to uphold fair dealings regulations and provide a formal, impartial route for dispute escalation when internal contract resolution mechanisms fail. ACSA will be able to impose fines or compensation, investigate complaints and request evidence.
- A qualifying seller may refer a complaint relating to the compliance of the pig purchase contract to the Secretary of State, who has powers to impose a civil penalty on a purchaser found to have failed to comply with their obligations, and to require the payment of compensation.
- The SI also sets out the process for appeals.
- Importantly, there is a provision for the Secretary of State to review these regulations and publish a report within five years. This includes an assessment of whether the provisions reman appropriate or need to be changed.
‘Win win’
Farming Minister Daniel Zeichner said: “Pig farmers work incredibly hard to supply high-quality British food and it’s only right they can do so on clear fair terms.
“These rules will give producers more confidence and help secure smoother, more constructive supply chain relationships.
“This is a major win for farmers, supported by industry and aligned with our Plan for Change, to strengthen food security and drive rural growth.”
The FDO regulations have been developed following extensive consultation with farmers and the wider industry, including the NPA.
NPA chief executive Lizzie Wilson said: “We are pleased to see this important piece of legislation has now received Parliamentary approval and has hit the statute book.
“We believe it will add a much-needed further layer of protection for producers by ensuring buyers cannot renege on the details of agreements, as has happened too often in the past.”
These pig sector rules are the second in a series of fair dealing reforms under the Agriculture Act 2020, following similar improvements to milk contracts in 2024.
The Government is working to introduce similar, tailored, legislation for the egg and fresh produce sectors.