FUW questions whether new dairy fairness rules are working as milk price cuts bite

The Farmers’ Union of Wales (FUW) has raised concerns that regulations intended to bring transparency to the dairy supply chain are failing their first major test, after processors announced sharp and, in some cases, retrospective cuts to milk prices.

The warning comes as the Welsh Dairy Show opens at the Carmarthen Showground on Tuesday 28 October, drawing major industry figures from across the sector.

Over recent weeks, processors have announced reductions of up to 6p per litre of milk, leaving farmers alarmed at the speed and scale of the downturn and questioning whether the new legal protections are being honoured.

Introduced in July last year, the Fair Dealings Obligations (Milk) Regulations 2024 apply to all dairy supply contracts. They require processors to provide written terms, set transparent pricing mechanisms, honour notice periods and avoid unilateral contract changes.

Fines

Enforcement powers sit with the Agricultural Supply Chain Adjudicator (ASCA), which can impose fines of up to 1% of a company’s turnover for breaches.

However, the FUW says recent actions suggests both potential loopholes and a lack of communication.

Brian Walters, a Carmarthenshire dairy farmer and FUW life member, said the regulations were widely welcomed after years of negotiation between government and industry. But said the abrupt price cuts “appear to contradict both the spirit and intent of those rules.”

“Only a few months on, we are witnessing sharp declines in milk prices with little warning or communication from processors,” he said. “It is therefore reasonable to question whether some processors are taking full advantage of recent market movements and volatility, benefiting from lower milk prices while leaving farmers to bear the brunt.”

He added, the situation highlighted “serious shortcomings” in how processors explain price trends at a time when energy, feed and borrowing costs have already pushed many businesses to the brink.

‘Properly upheld’

The FUW is urging ministers and regulators to ensure the rules are “properly upheld” and that farmers are fully informed about their rights and complaints routes. The Union fears that retrospective price changes in particular may constitute a breach of the new framework.

Policy Officer Elin Jenkins said that while market fluctuations were inevitable, better transparency could have softened the blow. “Greater communication from processors could have enabled suppliers to plan ahead and mitigate the impact,” she said.

A Defra spokesperson said: “This government backs our hard-working dairy farmers and wants to see fair supply chains and transparent dairy contracts.

“The new regulations make sure contracts are clear so that farmers understand how their price has been determined and the Agricultural Supply Chain Adjudicator can then take action where a contract is not compliant.”