New milk contract regulations come into force later this year

The introduction of the Fair Dealing Obligations Regulations, first announced in June 2023, has just been announced. The commencement of the regulations is due on 9th July for any new milk purchasing contract.  

Meanwhile, a period of transition to compliance for existing contracts is to be completed by 9th July 2025. 

Defra said that the regulations are a “product of evolution” from the voluntary dairy code of best practice on contractual relationships in the dairy sector that was introduced in 2012. 

Lack of legislation

FUW milk and dairy produce committee acting chair Brian Walters said that the voluntary dairy code was established to stamp out unfair contractual arrangements between milk producers and purchasers, which could in turn help stabilise the UK dairy industry. 

He added: “Despite many processors supporting the values of the voluntary dairy code, the lack of legislation meant that some processors continued with unfair and underhanded contractual expectations, leaving dairy farmers extremely vulnerable to market changes.” 

Contracts to be reviewed

In June 2020, the contractual practice in the UK dairy sector consultation was published. The responses provided direction for the newly made Fair Dealing Obligations (Milk) Regulations 2024. 

Mr Walters added: “We discussed various drafts of the regulations as a committee, and the union presented those views to Welsh Government and Defra representatives. 

“Most importantly, we managed to ensure that the regulations will apply to all milk purchasing contracts across the UK which avoids any risk of creating a two-tiered market. 

“Processors will now be required to review their contracts over the next twelve months in order to become compliant with these regulations, and I am hopeful that as a result of these changes there will be a fairer foundation for selling milk across Great Britain.” 

READ MORE: New dairy regulations promise to promote fairness

Significant step forward 

The development of the regulations has been supported by the NFU. The union’s dairy board chair Michael Oakes described the announcement as a “significant step forward” in increasing fairness and transparency across the dairy supply chain. 

He added: “For a long time, unfair milk contracts have held British dairy businesses back. These changes will give dairy farmers much needed business security and confidence, as well as helping to share risk along the dairy supply chain.” 

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