Northern Ireland dairy farmers now have the power to challenge contracts via a third party if they believe their milk buyer has “not followed the correct process”, according to the Ulster Farmers’ Union (UFU).
New dairy contract legislation came into force this month in the UK which aims to “make milk purchase contracts agreed in the dairy industry fairer and clearer”.
The Fair Dealing Obligations (Milk) Regulations (FDOM) 2024 will apply to all new contracts made for the purchase of milk from a producer.
There will also be a transition period of 12 months for existing agreements, after which all such contracts will need to be compliant with FDOM24 by next July.
Under the new regulations contracts for the purchase of cow’s milk are now required to be in writing, signed and include:
- Clear terms around pricing;
- The prohibition of unilateral changes to the milk purchase contract;
- Clear terms on the length of milk purchase contracts and the process of
- termination;
- A dispute resolution mechanism;
- All contracts must include an express term that requires the purchaser toact in good faith in relation to the contract.
Dairy farmers
According to the UFU’s dairy chair, Cyril Orr, the new regulations will “drive transparency and accountability, by stopping the imposition of contract changes without agreement”.
FDOM24 also introduces rules about what producers and purchasers can agree about the volumes of milk that will be supplied.
This is intended “to ensure that both parties can ensure stability for their business, that they are able to plan, and to minimise any wastage”.
Orr added: “This legislation will not set the price, nor will it introduce minimum prices, but it will bring greater transparency for all farmers.”
The UFU said has highlighted the importance of farmers having “the power” to challenge contracts via an independent third party, if they feel their milk buyer has not followed the correct process.
It also believes that the new regulations will allow farmer-owned structures, such as co-ops, “greater flexibility” in negotiations with milk buyers.
“The fact that these organisations negotiate on behalf of farmers boosts their bargaining power, putting them in a stronger position than individual farmers.
“There is also an enforcement mechanism in the regulation, through the Agricultural Supply Chain Adjudicator,” Orr added.
