Fair Dealing Obligations (Milk) Regulations 2024

Debate between Baroness McIntosh of Pickering and Lord Bishop of Hereford

Monday 25th March 2024 Lords Chamber

[The Lord Bishop of Hereford]

My Lords, I applaud His Majesty’s Government for these new contract regulations. They are both comprehensive and long overdue in addressing matters of serious injustice in the dairy farming sector. Unfair milk contracts have been an area of concern for the dairy sector for many years, going back to the voluntary code of practice for dairy contracts, introduced in 2012. In their current form, most milk contracts do not create mutually balanced business relationships between buyers and sellers. Rights and obligations are often heavily biased in favour of buyers.

At times of pressure, purchasers have been able to change contract terms and pricing mechanisms, in some instances even introducing retrospective penalties and price cuts without negotiation. The Covid-19 crisis saw many of these scenarios play out. Farmers were hit with price cuts at no notice, a lack of transparency on pricing, and delayed payments, resulting in significant pressures on producers during this challenging period.

These regulations will see freely negotiated and fairly balanced contracts, tailored to the needs of both buyers and farmers. They mark a significant step forward. It will be important for industry and government to help support the development of farmer representation structures, such as producer organisations within the dairy sector, to make the most of the regulations and improve trust and collaboration across the supply chain.

This legislation contains extensive powers for the Secretary of State to oversee and enforce the code. I welcome the recruitment of the agricultural supply chain adjudicator, who will, among other things, enforce the regulations on behalf of the Secretary of State. Can the Minister clarify whether it is intended that the person appointed to this role will learn from the operation of the Groceries Code Adjudicator, which has been in operation since 2013?

[Baroness McIntosh of Pickering (Con)]

My Lords, I warmly congratulate my noble friend on bringing forward these regulations. They plug a gap which has long been open, as most farmers do not supply supermarkets directly and so are not covered by the Groceries Code Adjudicator.

When I chaired the Environment, Food and Rural Affairs Committee in the other place, I took a small delegation to Denmark to learn about the effectiveness of its milk and other co-operatives. Does my noble friend see this as an opportunity to encourage more co-operatives and producer organisations than we have seen in the past?

I grew up in the hills of the north of England, where I could see how fiercely independent hill farmers and others were. There is often a certain resistance to working together. I hope that the regulations my noble friend has presented this evening will lend themselves to producing such co-operation in future.

The NFU has long argued for fairer, more transparent supply chains. I hope that its pleas will be rewarded in the regulations before us. Can my noble friend assure the House that the Government will lend their support to the development of representational structures, such as the producer organisations and co-operatives to which he alluded? This will ensure that the dairy sector can work collaboratively and effectively with improved trust and greater collaboration across the supply chain.

I warmly welcome these regulations.