Fair Dealing Obligations (Milk) Regulations 2024
(Limited Text - Ministerial Extracts only)
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Lord Douglas-Miller
That the draft Regulations laid before the House on 1 March be approved.
Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)
My Lords, I declare my interests as set out in the register. This evening’s protests around Parliament by farmers, seeking a fair price for their product, I think speaks to the need for these regulations.
These regulations are the first of those that were promised, with pigs and eggs to follow, and are part of this Government’s continued backing of our farmers, as the Prime Minister made clear at the NFU conference only last month. These regulations make use of powers in the Agriculture Act 2020, introduced by the Government to help level the playing field between dairy farmers and the larger processers that they supply. The then Agriculture Bill was debated intently in this House and the expertise of many noble Lords helped to shape these powers, for which I extend my thanks. I hope noble Lords share my delight that this work is coming to fruition.
The dairy sector plays an extremely important role in UK agriculture. Its success is underpinned by countless relationships between producers and processors that work extremely well. However, we have been made aware that, for some time, there are examples where relationships are not as constructive as they should be, and the vulnerable position farmers are in can often be exploited. The public consultation carried out in 2020 sought to uncover the issues and inform the types of interventions required to address them. The responses highlighted the main issues that dairy farmers experience, and we have constructed these regulations in direct response to those issues.
Lord Douglas-Miller (Con)
My Lords, I am very grateful for all the views shared on this SI. I believe we all recognise that the market needs to operate fairly, and that where there are vulnerable parties in the supply chain, the Government are justified in introducing protections. A great number of the questions this evening were focused around the adjudicator, its role, what precisely it is going to be doing and when it is going to be appointed, and I will come back to that in a little more detail and just answer one or two of the other questions first.
My noble friend Lady McIntosh of Pickering asked a few questions around co-operatives and producer organisations. As I said in my opening remarks, with these regulations we have looked to protect what was already working and to prevent only what was going wrong. Our consultation revealed clearly that many relationships in the dairy supply chain are exemplary and working well for all parties. This includes those where farmers have effective representation, be that through the producer organisation model or with the structures of a co-operative. As a result, some parts of these regulations do not apply for producers represented in this way. We hope this encourages purchasers to consider relationships with representative organisations, as evidence suggests that this can be beneficial to all parties.
I move on to the issues around the adjudicator, which were very eloquently expressed by the right reverend Prelate the Bishop of Hereford. The noble Lords, Lord Curry and Lord Grantchester, also touched on many of the issues, and the noble Baroness, Lady Hayman, talked extensively about them, so let me talk a bit about the role that the new adjudicator—the enforcement agency, if you like—will have. Our new adjudicator will focus on the first stage of the supply chain, on a sector-by-sector basis. We are confident that this targeted approach, looking in-depth at specific areas of the supply chain, will be very effective. We are currently recruiting our new agricultural supply chain adjudicator. The final decision will be taken by Ministers following the due Civil Service process. I have taken on board a lot of the comments made about the skills necessary for this individual and how we would like to replicate the process that was so successful with the Groceries Code Adjudicator.
I think it was the noble Lord, Lord Curry, who asked why an extension to the Groceries Code Adjudicator was not used instead. The idea of expanding the remit of the Groceries Code Adjudicator was explored in the formal call for evidence in 2016. This concluded that an extension of the GCA’s role further along the supply chain would not be appropriate. The reasons for this include that it would extend the GCA’s remit significantly. These regulations are focused on the contracts that dairy farmers hold directly, which are almost exclusively with processing companies. The Groceries Code Adjudicator instead regulates the relationships between the largest grocery retailers and their direct suppliers, another point covered by the noble Lord, Lord Grantchester.
There were further questions about why we are not going to use the regulations on all sectors. We will use the powers of Section 29 to protect farmers wherever necessary. However, the different needs and working practices of each industry mean that a targeted approach is needed to draft the most effective regulations. Our work on drafting this statutory instrument and the upcoming pork regulations has justified this approach, with the needs of each industry being very distinct. As well as developing regulations to apply to the UK pork sector, we have recently concluded consultations on the UK laying egg and fresh produce sectors. The Prime Minister has also announced a new review into the broiler chicken sector. There were a number of questions about what is going to be coming forward and the noble Baroness, Lady Hayman, also asked when we would see these SIs. When I have been asked that recently, I have replied, “Before the Summer Recess”, and I am hopeful that we might do even better than that in this case.
I am also picking up on the very important point from the noble Lord, Lord Grantchester, about the need for careful handling here, to ensure that the rollout into other sectors does not get derailed by heavy-handed or inappropriate activity. I am hearing that loud and clear.
I also picked up a number of questions from the noble Baronesses, Lady Bakewell and Lady Hayman, on why we have been waiting so long for these regulations. We can all acknowledge—I certainly do—that these regulations have taken longer than expected. However, it has been extremely important that we consulted and engaged extensively to ensure that we are able to take everybody with us on this journey. Again, for the reasons expressed by the noble Lord, Lord Grantchester, it is important we get this first step right. As noble Lords know, I am relatively new to this. Now that I am seeing it, I will push it forwards as fast as I possibly can.
The noble Baroness, Lady Hayman, also asked why these regulations do nothing about food waste. The fair-dealing powers can be used to address practices that result in on-farm food waste. In sectors where this can be an issue, such as the fresh produce sector, we can intervene and introduce new rules to reduce the amount of food going to waste. However, these regulations apply to the dairy industry, and it is only in extremely rare cases that milk is wasted—a point raised earlier. Our consultation did not reveal that a specific intervention was required to address this in this SI.
In summary, I hope noble Lords will agree that this SI is both necessary and proportionate.