Plans to promote fairness and transparency in the UK dairy sector through new regulations have been welcomed by industry bodies.

New rules have been drawn up by the Department for Environment, Food & Rural Affairs (Defra) that will allow farmers to challenge what they are paid for their produce by supermarkets and other buyers and make it easier to raise concerns over supply contracts.

The National Farmers’ Union (NFU) said the regulations, set to come into force later this year, “mark a significant step forward”.

Dairy farmers have long complained that are not getting a fair deal from supermarkets, especially when it comes to the price they receive for liquid milk.

The regulations set out by the government today (12 July) – and which follow the Farm to Food Summit it held in May – are intended to help establish stability and accountability across the dairy supply chain by enabling farmers to challenge prices, stop contract changes being imposed on them without agreement and ensure they are able to raise concerns.

The new rules follow the discussion with industry players, including the NFU and Dairy UK, and the government said it “has listened to feedback from farmers and processors to ensure the new regulations address previous concerns and provide tailored support for those in the industry”.

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Farming minister Mark Spencer said: “Farmers must be paid a fair price for their produce and these regulations will provide price certainty and stability for farmers by establishing written milk purchase agreements with clear and unambiguous terms.

“This represents a key milestone in our commitment to promote fairness and transparency across food supply chains to support farmers and build a stronger future for the industry, and will be followed by reviews into the egg and horticulture sector supply chains this autumn.”

The government said it is also developing regulations to improve relationships in the UK pig supply chain.

The dairy regulations will mean farmers have clearer pricing terms, with contracts setting out the factors which generate the milk price and allowing them to challenge prices if they feel this process is not being followed.

It will no longer be possible for buyers to impose changes to contracts without agreement.

Farmers’ contracts will also include “clear rules” on notice periods and contractual exclusivity.

An enforcement mechanism will be created to guarantee the regulations are followed.

NFU dairy board chair Michael Oakes said: “These new regulations mark a significant step forward in the government’s efforts to increase fairness and transparency in the dairy supply chain.

“For a long time, unfair milk contracts have held British dairy businesses back, and these changes will give dairy farmers much-needed business security and confidence, as well as helping to share risk along the dairy supply chain.”

A Dairy UK spokesperson said: “Dairy UK has always believed that this regulation should strike the right balance between greater transparency and maintaining the flexibility the industry needs to compete in a volatile and increasingly competitive marketplace.

“We’ve appreciated the engagement provided by Defra during the development of the regulation. We look forward to seeing the final SI [statutory instrument] and to continuing to work with Defra on the implementation of the regulation.”