Defra has submitted a summary of responses to the contractual practice in the UK dairy sector consultation which ran from June to September 2020 asking for views from processors and producers on the need for a potential reform in terms of UK dairy contracts.
The Farmers’ Union of Wales’ (FUW) response represented views from its Milk & Dairy Produce Committee and dairy producers from across Wales and it is positive to note that the majority of responses from producers submitted similar views, painting a clear picture for Defra and the devolved Governments to take forward.
The responses provide strong evidence that legislation for dairy contracts is necessary and that a statutory baseline is required to ensure that all contracts meet an acceptable standard. As was proposed by the FUW, the majority of respondents including producers and processors agreed that legislation should be flexible and transparent and that particular details such as notice periods and volumes should be agreed by the contracting parties, providing that minimum standards are met and that details within the contracts are clear.
However, there were varied views on the best method for dispute resolution in line with a robust penalty system and processors expressed concerns that price formulas for underpinning milk price could prove inflexible.
Defra will now work in collaboration with the devolved Governments to develop a Code of Conduct and establish legally binding minimum standards of contractual practice. There was a strong consensus that this legislation should be uniform across the UK however, Defra will consider the unique position of Northern Ireland and provide special provisions if necessary.
The summary of responses can be found here.