‘Significant step’: Long-awaited dairy contract legislation introduced
11th July 2024
After more than a decade of campaigning by the NFU and other UK farming unions and calling out unfair practices in the dairy supply chain, new legislation on dairy contracts has come into force.
The Fair Dealings Obligations (Milk) Regulations 2024 (FDOM24) came into force on 9th July and from this date, the new regulations will apply to all new contracts made for the purchase of milk from a producer.
The campaigners said they hope that the new regulations will establish transparency and accountability across the dairy supply chain by stopping contract changes from being imposed without agreement.
There will also be a system in place to enable farmers to verify the calculation of variable prices.
The regulations also include an enforcement regime, which will allow the secretary of state to impose substantial financial penalties on entities that make any breaches.
There will be a transition period of 12 months for existing agreements. All such contracts will need to be compliant with the regulations by 9th July 2025.
READ MORE: New dairy regulations promise to promote fairness
Significant step in more than a decade of campaigning
NFU Dairy Board chair Paul Tompkins said the implementation of the new regulations marks a “significant step” in a long road of campaigning to improve fairness across the supply chain.
“Today marks a significant moment for dairy farmers across the UK as the Fair Dealing Obligations (Milk) Regulations 2024 come into force for all new dairy contracts.
“The NFU has long been campaigning for fairer, more transparent contracts to aid trust and collaboration across the supply chain and prevent some of the worse abuses of power which one-sided contract terms allowed.
“This means, among other things, it must offer a clear, transparent price or pricing schedule, ‘A & B’ pricing under an exclusive contract is no longer allowed, it prevents unilateral changes to a contract if one party disagrees, farmer collaboration is encouraged to support effective negotiation and, importantly, there are now clear consequences should one party be found to be in breach,” he continued.
Certainty for the future
Mr Tompkins emphasised the significance of the creation of a level playing field for both farmers and purchasers, where farmers can be sure they are being treated fairly by their buyers, while purchasers who are trying to do right by their suppliers are not undermined by the riskier actions of others, after years of uncertainty.
“Confidence in your dairy contract and confidence in those you are doing business with is vital when it comes to long-term business planning and certainty for the future.
“For a fully functioning supply chain we must also see the regulations pave the way for better farmer representation and cross industry collaboration. Risk must be shared across the supply chain, as should reward.”
The NFU Dairy Board chair also spoke of the importance of continued conversation with the new ASCA (Agricultural Supply Chain Adjudicator).
“We know the UK dairy sector is varied and contract regulation won’t be the solution to everything. However, over the next few months myself and my dairy board will be going out in all the regions to speak to members about what the regulations could mean for them and their businesses.
“We will also continue to work closely with the new ASCA and his office to help the industry adjust to the new regulations, while ensuring producers are confident when raising a genuine complaint with the ASCA office that it will lead to action.
“We must all work together to ensure that this fundamental piece of work delivers for our industry and for farmers across the UK,” he concluded.
Regulation guidance can be found here.
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