Legislation to end abuses of power in UK dairy supply chain to go before parliament

The announcement was made this morning (Tuesday, February 20, 2024) by British prime minister Rishi Sunak in his speech at the National Farmers’ Union (NFU) conference.

The NFU hailed the announcement stating that the regulations would establish ‘transparency and accountability across the dairy supply chain by stopping contract changes being imposed without agreement’ – thus solving issues around exclusivity and notice periods - and introduce clearer pricing terms and a system that farmers can use to verify the calculation of variable prices.

The legislation will have an enforcement mechanism, with the secretary of state granted the powers to impose ‘substantial financial penalties’ to those who had breached the rules.

The news comes after more than a decade of campaigning by the NFU and other UK farming unions who had called out unfair practices and abuses of power in the dairy supply chain.

“Tomorrow [Wednesday, February 21, 2024], we’re laying new regulations for the dairy sector, and we’re launching a review of the poultry sector,” Sunak said in his speech to the conference.

Proposals for the new legislation were lodged last summer as details about the enforcement mechanism were still being ironed out. At the time, NFU diary chair Michael Oakes told us that ‘on too many occasions in the past, farmers have taken a disproportionate share of the risk within the supply chain, and it’s been very easy for processors to manage their risk or margin with the farmgate milk price. “The market will always set the price, but at least farmers will understand what it is that moves their price,” he explained.

He added that he didn’t believe there was a contract that was non-exclusive in the UK dairy supply chain at the time, meaning that a farmer couldn’t legally expand their business beyond that one buyer. “Going forward, if a processor doesn’t want any more liters from you, as long as you don’t break your original contract, we don’t believe you should be tied to one particular buyer,” he said.

The British prime minister also said in his speech that similar contract regulations for the pig sector will come later in 2024.

Sunak announced that grants of around £427m will be made available to farmers, including £220m for technology and productivity schemes allowing access to new equipment such as automation gear to reduce the reliance on overseas workers.

Increases to the management payments for the Sustainable Farming Incentive were also announced.

Finally, the UK government is set to publish an annual food security index, to capture and highlight key data needed to monitor how current levels of food security are being maintained. This will happen at the next Farm to Fork Summit in spring.