UK-wide consultation into dairy sector contracts comes to an end

The UK Government, working with the devolved administrations, launched a consultation in June 2020 seeking to end any unfair practices across the UK’s dairy sector. The consultation has now come to a close (15 September).

Evidence gathered during the Groceries Code Adjudicator Call for Evidence in 2016 highlighted how unfair practices have persisted in the dairy industry, and the consultation aimed to explore whether regulations could be introduced to ensure farmers are treated fairly.

This evidence suggested unfairness in the supply chain has sometimes been caused by milk buyers having the power to set and modify the milk price in a contract, often with little notification, leading to uncertainty and pricing that can be unfair to dairy farming businesses.

To supplement wider efforts to support dairy farmers during the coronavirus pandemic and into the future, the UK Government launched the consultation to receive views from dairy farmers and processors across the whole country on whether future regulation could be used to strengthen fairness and transparency.

Proposals included an option to introduce a mandatory pricing mechanism within all contracts between dairy farmers and processors. This would ensure the price paid for milk produced by the farmer is formally agreed within the contract, and that contract negotiations take place in a clear and transparent way.

Farming Minister, Victoria Prentis, said: “It is absolutely vital that our dairy farmers are paid fairly for their high-quality produce and I am committed to cracking down on any unfair practices within the UK dairy industry.”

In response to the consultation launch, key players in the dairy industry such as the Ulster Farmers’ Union (UFU), Dairy UK and the National Famers’ Union (NFU) welcomed the news and gathered views from members, processors, retailers and other industry stakeholders.

In a blog post, NFU dairy board chairman, Michael Oakes, wrote: “It was very uplifting to see so many of our dairy members dial in and take the opportunity to make their points, concerns and questions known, and this has only continued throughout regional meetings…

“I feel proud that, despite it being under less than ideal circumstances with the coronavirus pandemic, coupled with the busy months of harvest, our members have stepped up and paid attention to the sheer scale and importance of this consultation for our industry…

“It really feels like there’s a mindset shift across the industry and a real collective understanding and agreement that something needs to change, and contract reform is a vessel by which to make this change.”

Dr Judith Bryans, Chief Executive of Dairy UK, said: “Ultimately the best outcome for both processors and farmers will be a decision based on totality of the evidence provided, and not one based only on emotion. Whilst ready to and keen to respond, we’re still mindful that the sector is still working its way through the ongoing the COVID-19 pandemic; that as a nation we continue to move quickly towards the end of the Brexit transition period; and will see a step change in agricultural and environmental policies not seen for generations. There is already a lot on the plates of food businesses, to which regulation of contracts could significantly add to, if introduced.”