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The new regulations, laid before parliament on Wednesday, include the creation of a new adjudicator-type body

The creation of a statutory adjudicator-type body “with teeth” to regulate dairy contracts could ultimately be adopted across the wider farming supply chain, NFU Dairy Board chair Michael Oakes has suggested.

Commenting ahead of the government laying new legislation on fairer dairy contracts before parliament on Wednesday, Oakes said the new regulations and its enforcement mechanism could be rolled out across other categories in due course – helping tackle the growth of unfair trading practices in categories such as horticulture

The new legislation’s enactment was confirmed by Rishi Sunak at this week’s NFU Conference in Birmingham. It follows a decade of campaigning from the dairy sector and supersedes a voluntary code of practice long dismissed as ineffective, which failed to tackle unfair practices across the dairy sector.

The rules would establish transparency and accountability across the dairy supply chain by stopping contract changes being imposed without agreement, the NFU and its sister farming unions across the UK said.

They include the establishment of legally binding, minimum standards of contractual practice, while there will also be a system in place to enable farmers to verify the calculation of variable prices.

The regulations, enforced by a new Agricultrual Supply Chain Adjudicator – which Defra is currently recruiting for – will be backed up by the ability of the Defra secretary to impose “substantial financial penalties in respect of any breaches”, the NFU added.

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Following growing concern over the increasing use of so-called middlemen outside the scope of the Groceries Code Adjudicator within some retail supply chains in recent weeks, Oakes suggested the new enforcement body could also be applied to regulate the relationships of primary producers, processors and retailers in other categories.

“Some of these middle companies are being created to find away around the GSCOP rules so this new mechanism could be [expanded into other categories],” Oakes told The Grocer at the conference. The results of a Defra supply chain review looking into fairness in the horticulture sector is due to report its findings over the coming months.

On the impact of the new dairy legislation, he added unfair milk contracts had “held back” many UK dairy businesses for a “long time”.

“While progress has taken far longer than any of us hoped and expected, I am confident that, from today, we are finally on the right path to building a stronger, more resilient future for the UK dairy sector,” he added.

“Notwithstanding the progress that is being made, the NFU believes that representative organisations, such as producer organisations, will play an important role in helping farmers negotiate contracts within the dairy sector and we will continue to support the development of representative structures like these to help improve trust and collaboration across the supply chain.

After the statutory instrument has been laid before parliament, the legislation will be subject to the usual parliamentary process where it will be debated, Defra confirmed.

The regulations will come into force some 12 weeks after the process is completed for all new and renegotiated contracts.

There will then be a 12-month implementation period before existing contracts also need to be compliant – “in order to allow the industry the necessary time to adjust to the new rules”, Defra added.

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