Fair Dairy Contracts for All

After many years of campaigning, the UK Parliament have introduced new legislation known as the ‘Fair Dealing Obligations (Milk) Regulations 2024’ which is now in force in the UK. The regulations aim to provide fairer contract terms for dairy contracts in the UK, which have historically been a major concern in the dairy sector.

Over the course of the next year, all milk contracts will need to be negotiated and brought into line with the new legislation.

5 Key Legislation Updates

1. Price – Greater transparency for farmers. Under the legislation, there are no set prices or minimum prices, and the price is led by the market, but if a contract contains a variable price, the new legislation ensures that prices can only change compared with specific factors set out in the contract which have been agreed by both parties.
2. Variation to Contract – all variations must be mutually agreed by both parties to the milk contract, except in circumstances where you are part of a co-operative, or producer organisation. This will stop milk buyers from being able to make changes to the contracts without agreement from you as the individual farmer.
3. Exclusivity – Contracts where you as the farmer must supply every litre of milk exclusively to one producer are still permitted under the new legislation. However, the main change is that exclusive contracts will not have tiered pricing and are not allowed in circumstances where the milk contract is for a fixed volume of milk.
4. Farmer Owned Structures – Co-operative groups and producer organisations will now have more flexibility during their negotiation with the milk buyer. Now that co-operatives and producer organisations are able to negotiate on behalf of a group of farmers, this increases the leverage that they have to negotiate more advantageous terms in the contract. Given that this will streamline the contract negotiation process, it is expected that processors will utilise this process leading to fairer contracts across the board.
5. Notice Period – The new legislation implements a maximum notice period to give to the farmer and a minimum period to be given by the processor. These notice periods are effective for contracts of more than 12 months.

Remember 9th July

The key date in this legislation that all parties to milk contracts need to be aware of is the 9th of July.

• 9 July 2024 – all new milk contracts entered into after 9 July 2024 must be compliant with the new legislation
• 9 July 2025 – all milk contracts need to comply with the legislation

It is important to remember that there are no exceptions to these dates, so if you are a dairy farmer, with a milk contract in place currently with a producer, you will need to ensure that you negotiate and update your contract to comply with the legislation by 9 July 2025.

Should you need any assistance in the negotiation of existing or new milk contracts please get in touch with our Rural team. If you are a member of NFU Cymru, members can access advice through the CallFirst Scheme. As panel solicitors for NFU Cymru we offer a 12.5% discount to all NFU Members, as well as being able to assist those members with the benefit of Legal Assistance Scheme cover with a Contract Checking Service. Get in touch on 03333 208644 or email hello@jcpsolicitors.co.uk