Ministers announced plans on 3 February to develop the new statutory code for the dairy sector, in response to last year’s consultation into how contracts and relationships could be improved.
Building on evidence shared during the consultation, the code will seek to provide a guiding framework, establishing minimum standards and offering businesses the flexibility to adapt contracts to their individual circumstances.
Government plans to engage further with industry to develop the standards to be specified within this framework.
Department for Environment Food and Rural Affairs (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, for an industry that works hard year-round to provide the dairy products for which we are world-renowned.
Cut down on unfair practices
“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.”
Commenting on the move, Dr Judith Bryans, chief executive of dairy industry trade body Dairy UK said: “We welcome DEFRA and the devolved administrations’ response to the consultation on regulation of contracts.
“Dairy UK is supportive of the introduction of a mandatory code of conduct to ensure a level playing field on contracts, as we set out in our consultation response. We therefore welcome the commitment made today, particularly the need for flexibility and transparency within the supply chain.
“We look forward to seeing more detail on the code and to working closely and constructively with DEFRA and the devolved administrations on how the code will translate into contract working for the industry, and to play our part in helping to ensure its successful implementation into the market.”
Enabling farmers and processors to collaborate
A joint statement from dairy representatives of the UK farming unions said the code would provide a more effective supply chain, enabling farmers and processors to collaborate to ensure fairer and more equitable terms.
“For too long, dairy farmers have borne far too much of the risk in the dairy supply chain and inappropriate contract terms are often at the root of the problems,” said the statement.
“Contracts have been weighted too heavily in favour of the milk buyer who can change terms and pricing mechanisms, and even introduce price cuts without negotiation, while locking farmers into changes without recourse.”
The unions hoped the greater collaboration fostered by the code would help the sector to recover from the impacts of COVID-19 and work towards new trading arrangements outside the EU.
Learning from Australia
“Although we recognise that our dairy market has some differences, for example compared to Australia, we think there are lessons we can learn in building our own model,” the unions continued.
“Even within the UK, there are clearly markets operating in different ways, such as Northern Ireland, and this will need to be taken in to account when designing the new code.”
However, while the unions welcomed the announcement, they called for more effort in developing the new dairy code to continue into other parts of the industry.
“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 concluded.
“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.”