The government will create a new Code of Conduct to crack down on unfair practices within the UK dairy supply chain following a consultation on the issue.
Defra has today (3 February) published a response to last year’s 12-week consultation seeking views from farmers and processors about how contracts and relationships could be improved.
It was launched in June 2020 to explore whether new rules and regulations could be introduced to ensure fairer treatment across the UK’s dairy sector.
Imbalances of power within the supply chain were believed to be causing instability for farmers, such as where milk buyers have the ability to set and modify the terms of a contract at short notice.
According to Defra, the responses to the consultation 'clearly demonstrated' the need to introduce new rules to require certain standards for contracts between those producing and buying milk for processing.
The consultation also revealed that the distinctive circumstances in Northern Ireland may need to be reflected in regulations, due to the prevalence of co-operatives and the existing highly integrated cross border supply chain with the ROI. Defra said this would be be considered.
A new statutory Code of Conduct will be created for UK dairy sector, using section 29 of the Agriculture Act 2020, to 'increase fairness in the supply chain and help farmers become more competitive'.
The new code will seek to provide a 'guiding framework', which establishes minimum standards but also provides businesses with the flexibility to adapt contracts to their individual circumstances.
The UK government, along with the devolved administrations, said further engagement with industry remained necessary to develop the standards to be specified within this framework.
Defra farming minister, Victoria Prentis said: “It is only right that any contracts drawn up between farmers and processors deliver fair conditions across the board.
“This new Code of Conduct will crack down on unfair practices within the supply chain, supporting the dairy sector and ensuring that our dairy farmers remain competitive as they look to the future.”
Scottish rural economy secretary, Fergus Ewing added that it was an 'important moment' for the dairy industry in Scotland.
“The dairy mandatory code of conduct consultation demonstrated that Scottish respondents were the strongest supporters of putting transparency into contracts to protect our farmers.
"It is very important that we listen to the views of both our hard-working dairy farmers and processors here in Scotland."
In a joint statement, the UK farming unions welcomed the announcement, but they said it was 'only the beginning' in changing the structure of how the sector operated.
"We hope the whole industry will take on board the results of the government consultation and work collaboratively to find a positive way forward," they said.
"It’s essential that the UK dairy market is fit for purpose for all parts of the supply chain, supporting innovation and resilience in UK dairy, and supplying quality dairy products for the public to enjoy.”
Evidence gathered during the Groceries Code Adjudicator Call for Evidence in 2016 highlighted how unfair practices have persisted in the dairy industry.
Last year’s consultation looked at whether regulations could be introduced to ensure farmers are treated fairly within the supply chain.