Fairer regulations imposed on all new milk contracts

Legislation has been introduced to create a fairer, more transparent and accountable dairy supply chain.

The Fair Dealings Obligations (Milk) Regulations 2024 came into force on 9 July and apply universally to all new contracts used for the purchase of milk from a producer.

New contracts are required to include a cooling-off period of 21 days, during which farmers can terminate the contract without penalty.

See also: Dairy contracts put to parliament in quest for fairer treatment

If a processor wishes to terminate the contract they must give the producer a minimum notice period of 12 months.

Regulations will be fully enforced on all existing contracts by 9 July 2025.

Industry bodies including the NFU have been pushing for fairer dairy contracts for more than a decade and have welcomed the new regulations.

NFU dairy board chair Paul Tompkins said it marked a significant moment for dairy farmers across the UK.

“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 worst abuses of power which one-sided contract terms allowed.”

He added: “Any new contract offered to a producer must be compliant with the new regulations.

“This means, among other things, it must offer a clear, transparent price or pricing schedule; A and 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.”

Agricultural Supply Chain Adjudicator

Richard Thompson has been appointed as the Agricultural Supply Chain Adjudicator and will enforce the regulations on behalf of the Defra secretary.

Mr Thompson was previously principal ombudsman at the Financial Ombudsman Service and has held senior positions at the Office of Communications (Ofcom) and the Office of Fair Trading (OFT).

Mr Tompkins said the NFU would work closely with the adjudicator to help the industry adjust to the new regulations, while ensuring producers are confident when raising genuine complaints 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 said.