Farmer fears over milk price reductions

The Farmers’ Union of Wales (FUW) has questioned whether the recently introduced Fair Dealings Obligations (Milk) Regulations 2024 are delivering on their promise of transparency to dairy farmers, following a wave of milk price reductions by processors.

Over recent weeks, processors across Wales have announced cuts of up to 6p per litre, with some price changes applied retrospectively - with industry questioning whether such moves are in keeping with the letter or the spirit of the new regulations. 

The FUW says such actions have left members questioning actions by processors, and whether the new legislation, which was designed to ensure fairness and transparency in the dairy supply chain, are working in practice.

Commenting, FUW Life Member and dairy farmer, Brian Walters said: “This is the first real test of the regulations introduced earlier this year following a lengthy period of collaboration between Government and industry. The measures were rightly welcomed as a significant step towards greater fairness and transparency in the dairy sector.

“Yet, only a few months on, we are witnessing sharp declines in milk prices with little warning or communication from processors - actions that appear to contradict both the spirit and intent of those rules. This situation has exposed serious shortcomings in communication between processors and producers on price trends, at a time when the dairy industry’s viability is already under considerable pressure.

“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 of the impact. Such behaviour, if occurring, would run counter to the principles of fairness and shared responsibility that these regulations were designed to uphold.”

Under the Fair Dealings Obligations (Milk) Regulations 2024, processors must follow rules around contract terms, notice periods, and pricing mechanisms. Breaches can be reported to the Agricultural Supply Chain Adjudicator (ASCA), which has the power to impose fines of up to 1% of a company’s turnover.

However, the FUW warns that these latest price decisions by processors, including the retrospective cuts, may test the limits of the new framework and expose gaps in enforcement. 

The Union has urged government and regulators to ensure that the legislation is properly upheld, and that farmers are fully aware of their rights and complaint routes.

Elin Jenkins, FUW Policy Officer, added: “We recognise that market conditions are challenging and fluctuations inevitable. However, questions must be raised about the Fair Dealings Regulations which were specifically designed to promote transparency and protect producers from unfair practices. 

“Although market intelligence had indicated potential price pressures, the abrupt reductions have nonetheless come as a shock. Greater transparency and open communication from processors could have enabled suppliers to plan ahead and mitigate the impact.”