In June, Defra and the Devolved Governments launched a consultation into contractual reform for the dairy sector. An earlier review of supply chain fairness by the Grocery Code Adjudicator found an uneven distribution of power within the dairy supply chain and views were sought on contract regulation aimed at improving fairness in the dairy supply chain.
The FUW responded to the consultation after consulting with it’s Milk and Dairy Produce Committee and County Branches across Wales. During the Covid-19 pandemic, the Union received reports from many members who had borne a disproportionate amount of the cost in the supply chain when markets changed overnight.
In light of the pandemic, the FUW supported contract regulation. However, due to the large number of members that supply farmer owned co-operatives, it was also felt that any newly implemented regulations should provide the flexibility to allow for those co-operatives to continue to operate as they do currently for the benefit of their members.
The FUW response also made clear that any contract should explain clearly on what basis prices would be calculated and that any changes proposed to the method of calculating prices should be consulted on appropriately, allowing a fairer balance of risk between producer and processor. If legislation is to be introduced, it must be applied fairly and equally across all UK nations.
The Union also requested for force majeure clauses for TB breakdowns and adverse weather to be included where fixed volumes were part of the contract to ensure that producers are not penalised for volume changes where the circumstances are outside of their control.
There have been many unacceptable instances in previous years where members have been forced to agree to a new contract or face price cuts without having the ability to take advice due to confidentiality clauses - contract types which the FUW believes should be prohibited as part of this reform.
as can be viewed here.