Shropshire Farming Talk: The Fair Dealing Obligations (Milk) Regulations 2024

Starting earlier this month, all new milk contracts must comply with the Regulations. Existing milk contracts must comply with the Regulations by July 9 2025.

The main areas the Regulations cover are:

1. Price

A milk purchase contract must have a fixed price, a variable price or a combination of both. There is no “set price” nor a “minimum price”. Milk prices shall continue to be market led.

A fixed price milk contract can have more than one fixed price within the duration of the contract. For this to happened, the contract must specify the period to which each price relates, and the date on which each period begins and ends. The contract must also include a procedure whereby milk prices can be reviewed where exceptional market conditions occur. These conditions must be included in the contract.

A variable milk purchase contract must have a mechanism in place to determine the milk price. The price must be determined by reference to specific factors which must be included in the contract. The contract must include a procedure whereby an independent third party can verify the process of determining the flexible price.

2. Variation

Any variation to the contract must be agreed by both parties. Purchasers cannot enforce unilateral changes to the contract. This provision does not apply to a milk purchaser who has an internal democratic structure, as defined in the regulations, for example a co-op, or where the farmer is a member of a producer organisation.

3. Cooling off period

Every contract should have a cooling off period. A producer may terminate the milk purchase contract without penalty within the first 21 days of the contract being made.

4. Termination

A contract with a duration of over 12 months must include a process by which the contract can be terminated. A purchaser must give the producer at least 12 months’ notice, unless the contract is less than 12 months. The Regulations also include circumstances where the contract can be terminated with immediate effect.

5. Exclusivity

Exclusive contracts are still permitted, however you cannot have contracts where the price to be paid for the milk changes if the amount of milk provided by the producer exceeds a certain volume.

If you'd like any further information, call our team at Agri Advisor on 01938 536 405 or advisor@agriadvisor.co.uk

by Rhys Gittins, Trainee Solicitor at Agri Advisor