Fair Dealing Obligations (Milk) Regulations 2024

Baroness McIntosh of Pickering Excerpts

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.

[Lord Curry of Kirkharle (CB)]

My Lords, I too warmly welcome these regulations. It is interesting and rather ironic that the farmers are protesting in Parliament Square while we are addressing this topic. When I saw the tractors outside, I felt rather envious. I wished I had brought my own tractor from Northumberland, although it might have taken most of the weekend.

This has been an issue for a very long time. I have been involved in trying to encourage better relationships within the dairy and other sectors for at least 25, if not 30, years. This is an important development. I welcomed it when the then Agriculture Bill came into the House. It was a big step forward for the Government to bring this in as part of that Bill.

I have two questions for the Minister. First, did the Government seriously consider whether to extend the existing GSCOP and Groceries Code Adjudicator to include the elements contained in that Bill? There have been at least two reviews of the scope of GSCOP during the years. Many of us have been keen that that scope should be extended down the supply chain to provide greater protection and support for primary producers.

Secondly, if the answer to that is, “Yes, we have considered it but have decided to go it alone and establish our own adjudicator within the dairy sector”, are the Government likely to extend that scope to other sectors? Many of the issues dogging the dairy sector dog other sectors too. Relationships within supply chains are nothing like as good as they should be and, in many cases, degenerate into confrontational relationships. In my view, it is important to look at other sectors. When the adjudicator is appointed, it should be made clear that—if it is government policy—the remit is likely to be extended to include other sectors.