Mandatory written contracts expected in dairy

Published 19 February 18

The Government has responded to the formal Call for Evidence, launched in October 2016, to explore the case for extending the remit of the Groceries Code Adjudicator. While the Government is not supporting an extension, the consultation revealed a number of specific concerns:

  • problems with the balance of bargaining power in the groceries supply chain
  • examples of unfair or unclear contract terms
  • difficulties caused by late payments
  • a lack of trust and transparency that discourages good relationships across the supply chain

Due to this, some changes will affect dairy farmers, through mandatory written contracts. Currently the EU rules give Member States discretion to make written contracts between milk producers and processors mandatory or not. The Government plans to introduce mandatory written contracts in 2018, with public consultation due to be launched by March. As a minimum, contracts should include:

  • the price payable for the delivery of milk – expressed either as a static price or a formula
  • the volume of raw milk to be delivered and the timing of deliveries
  • the duration of the contract
  • details of payment periods and procedures
  • arrangements for collecting or delivering raw milk
  • rules that apply in the event of force majeure