DEFRA announcement comes after long-running lobbying work to drive greater fairness and transparency into the supply chain.
NFU Scotland has welcomed the announcement from the UK Government of its intention to bring forward new contractual regulations to increase fairness and transparency in the dairy supply chain.
The announcement, made by the Minister of State for Food, Farming and Fisheries Mark Spencer MP follows many years of concerted lobbying by NFU Scotland and fellow farming Unions.
Following a commitment made in February 2021, the UK Government, working in close collaboration with the devolved governments, has produced a statutory Code of Conduct for contracts between dairy farmers and their milk buyer, using the regulation making power in section 29 of the Agriculture Act 2020. Regulations will provide a framework, establishing legally binding minimum standards of contractual practice, whilst providing businesses with the flexibility to adapt contracts to their individual circumstances.
With the UK Government currently investigating how the markets for pigs, eggs and horticulture operate, NFU Scotland believes this announcement puts down a marker in terms of how the UK Agriculture Act 2020 could be used effectively to deliver fairness, certainty and equity in other supply chains.
NFU Scotland President Martin Kennedy said: “This is a significant step forward to drive fairness and transparency into the dairy supply chain and deliver a more robust future for the dairy sector. We will study the Statutory Instrument, once published, in detail to ensure that this important legislation delivers for Scottish dairy farmers.
“For too long, dairy farmers have borne far too much of the risk in the dairy supply chain and inappropriate contract terms are often at the root of the problems. These statutory contractual changes have the potential to give greater confidence to all those producing milk as well ensuring that burden of risk associated with producing milk is shared more evenly across the whole supply chain.
“It is appropriate to pay tribute to the hard work of many within NFU Scotland in getting us to this point but would make particular mention of the efforts put in by our Milk Committee’s Milk Contracts sub-group, backed by the dedicated milk policy staff at NFU Scotland.
“For more than six years, we have been actively talking to all parts of the dairy supply chain in Scotland, UK and abroad on the introduction of a statutory code of conduct for contracts and we would like to take this opportunity to thank all the farmers and stakeholders that interacted with NFUS during the process.
“NFUS will continue to work with the other UK Unions and industry stakeholders to ensure a full examination and smooth roll out of the new statutory code which will put us 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 and dairy produce.”
Notes for Editors
- The UK Government News Release on dairy supply contract regulations coming into force later this year is available at: New regulations to promote fairness and transparency for dairy sector - GOV.UK (www.gov.uk)
- According to Defra, the 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 is not being followed. This is a major advance in transparency, which ensures fairer pricing and addresses historical discrepancies in the dairy industry.
- Changes to contracts cannot 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.
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Contact Bob Carruth on 07788 927675