New rules, clamping down on unfair buying practices in pork supply chains are a step closer, following MP approval of new legislation enabling regulated contracts.
The Fair Dealing Obligations (Pigs) Regulations, which will legally require binding contracts between buyers and sellers for the first time, cleared their first parliamentary hurdle on Tuesday. The law is set to be debated by the House of Lords next month.
The draft statutory instrument – expected to come into effect in the summer, with a 12 month rollout period – will establish “a framework for fair and balanced supply contracts”, farming minister Daniel Zeichner told MPs this week. It would also “put in place the kind of transparency and fairness that pig producers deserve, giving them more confidence and a fairer footing in the market”, he added.
Similar legislation was implemented in the dairy sector last year, which will also be used as a basis for Defra’s plans to tackle unfair trading in the egg and fresh produce supply chains. The regulations will be overseen by the new Agricultural Supply Chain Adjudicator.
Under the new pig sector rules, contracts “must specify expected supply volumes and remedies if those volumes are not met”, Zeichner said. Producers will also have the flexibility to opt out of the regulations for trades on the spot market.
Other key provisions address fairness in contract termination and clarity around force majeure events. “Although specific terms may still be negotiated, new restrictions help prevent one-sided practices, and contracts must clearly explain both parties’ rights and responsibilities in such situations,” Zeichner explained.
“The core principle throughout this is that contract terms cannot be changed unilaterally. Any changes must be agreed in writing by both parties, ensuring transparency and fairness, while allowing flexibility.”
The regulations follow the pig backlog crisis in 2021/22, when a global glut of supply caused by China closing down European access to its market, coupled with a Brexit-linked shortage of butchers, led to as many as 200,000 pigs being held back on farms. Thousands more healthy animals were culled, with the crisis costing the sector more than £750m, amid rows over a lack of support from buyers for struggling farmers.
The severity of these issues had “raised questions about the functioning of the supply chain”, Defra said at the time, prompting a consultation on transparency, price reporting, clarity of contractual T&Cs and market consolidation in 2023, which ultimately led to the creation of the new fair dealing rules.
Zeichner said the new regulations would “give producers and processors greater certainty and stability”, while also promoting “pricing transparency”.
He added: “We have been keen to protect and encourage transparent models in which prices are based on factors that farmers can verify themselves, such as market indices or shared cost of production data.”
National Pig Association CEO Lizzie Wilson said the backlog crisis had “highlighted very few producers out there had legally binding contracts, and some that did were not fit for purpose”.
Many deals were done “on a ‘wing and a prayer’, with some based on gentlemen’s agreements or just a string of emails”, she added.
The new regulations, which would be monitored and could be altered accordingly if found to not work for the sector, offered the UK’s 600 pig farming businesses an “infinitely better” way of working than in the past, she said.
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