The Defra Farming Minister Mark Spencer MP announced that the regulations, which will come into force later this year, will aim to empower dairy farmers’ negotiating positions, to prevent changes to contracts without farmers agreement and to increase transparency and accountability across the dairy supply chain.
Securing a thriving industry
This announcement follows a consultation held by Welsh Government, Defra and the other devolved administrations in 2020 where the dairy industry as a whole called for change. In our response at the time NFU Cymru noted the significance to milk producers in Wales and highlighted how contract reform offered an opportunity to secure a thriving industry for all those involved in the dairy industry in Wales.
NFU Cymru Dairy Board Chairman Jonathan Wilkinson said: "This announcement signals that we are on the right path to delivering a stronger, fairer and more resilient future for the Welsh dairy sector. For a long time, unfair milk contracts have held dairy farming businesses back and these regulations, when introduced, will help share risk along the dairy supply chain, giving dairy farmers more confidence and security.”
“We will continue to work with Welsh Government, Defra and our counterparts in the other UK farming unions as these regulations are delivered to ensure they not only benefit farm businesses and the supply chain, but also the millions of consumers who enjoy our quality, nutritious and climate friendly Welsh milk.”
Striking the right balance
Defra has also been consulting with milk processors and in response to this announcement, Dairy UK said the regulation should strike the right balance between 'greater transparency' and 'maintaining the flexibility the industry needs to compete'.
What will the regulations mean?
The necessary legislation needed to introduce the new contract regulations are scheduled to be laid in the Houses of Parliament later this year. When introduced, Defra say these regulations will mean:
- 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. This is a major advance in transparency, which ensures fairer pricing and addresses historical discrepancies in the dairy industry.
- Changes to contracts can’t be imposed on farmers without their agreement. This will encourage dialogue between the parties where changes do need to be made – improving trust within the supply chain.
- Farmers’ contracts will all include a straightforward way to raise concerns about their contracts, promoting accountability and timely issue resolution.
- There will be clear rules put in place on notice periods and contractual exclusivity, protecting the rights of both buyers and sellers. This will remove any ambiguity from contracts and protect the rights of both buyers and sellers.
- An enforcement mechanism is created to guarantee the regulations are followed, ensuring a fully fair and transparent dairy industry on a solid foundation to thrive in the future.
A word from the Farming Minister
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.”
Defra has said this announcement marks part of a series of supply chain interventions outlined at the Farm to Fork Summit hosted by the Prime Minister Rishi Sunak at Number 10 Downing Street earlier in the year which NFU Cymru President Aled Jones and other industry leaders were invited to attend.