The Fair Dealing Obligations (Milk) Regulations 2024
| Jurisdiction | UK Non-devolved |
| Year | 2024 |
| Citation | SI 2024/537 |
2024 No. 537
Agriculture
The Fair Dealing Obligations (Milk) Regulations 2024
Made 16th April 2024
Coming into force in accordance with regulation 1
The Secretary of State, in exercise of the powers conferred by sections 29 and 50(3) of the Agriculture Act 20201, makes the following Regulations.
In accordance with sections 29(10) and 50(6)(a) of the Agriculture Act 2020, a draft of this instrument has been laid before Parliament and approved by a resolution of each House.
PART 1
General
Citation, commencement, extent and application
1.—(1) These Regulations may be cited as the Fair Dealing Obligations (Milk) Regulations 2024.
(2) They come into force on the commencement date.
(3) They extend to England and Wales, Scotland and Northern Ireland.
(4) Subject to paragraphs (5) and (6), these Regulations apply in relation to milk purchase contracts.
(5) They do not apply in relation to any quantity of milk that the business purchaser2takes possession of before the transition date under a milk purchase contract that was in force immediately before the commencement date.
(6) Part 4, excluding regulations 9 and 10, does not apply to a milk purchase contract—
(a)
(a) where the terms that relate to the price of milk supplied under it were agreed to on behalf of the producer by a representative organisation, of which the producer is a member; or
(b)
(b) where the business purchaser has an internal democratic structure and the contract relates to the purchase of milk from a producer member.
(7) In this regulation—
“the commencement date” is the day after the expiry of 12 weeks, beginning with the day on which these Regulations are made;
“the transition date” is the day after the expiry of 12 months, beginning with the commencement date.
Interpretation
2. In these Regulations—
“fixed-duration contract” has the meaning given in regulation 5(2);
“fixed price” has the meaning given in regulation 7(2);
“internal democratic structure”, in relation to a business purchaser, means an organisational structure—
(a) which is established in the business purchaser’s constitution; and
(b) within which is a decision-making body—
(i) the membership of which includes a majority of individuals who are democratically elected by the producer members of the business purchaser; and
(ii) which has ultimate decision-making authority in relation to contracts for the purchase of milk;
“milk” means cow’s milk;
“milk constituent” means a substance contained in, or which can be extracted from, milk;
“milk purchase contract” means a contract made by a business purchaser for the purchase of milk from a producer;
“notice of intent” has the meaning given in regulation 23(2);
“producer” means a qualifying seller falling within section 29(3)(b)(i) of the Agriculture Act 2020;
“producer member” means a producer that has an ownership interest in the business purchaser in question;
“representative organisation” is—
(a) a producer organisation or an association of producer organisations recognised under Chapter 3 of Title 2 of Part 2 of Regulation (EU) No 1308/2013of the European Parliament and of the Council of 17 December 20133establishing a common organisation of the markets in agricultural products; or
(b) a pre-commencement society, within the meaning of section 150 of the Co-operative and Community Benefit Societies Act 20144, that does not carry out processing activities5;
“the parties” in relation to a milk purchase contract, means the business purchaser and the producer who are party to the contract;
“variable price” has the meaning given in regulation 8(2).
PART 2
Requirement to use a milk purchase contract
Requirement to use a milk purchase contract and general provisions
3.—(1) A business purchaser may not purchase milk from a producer unless the purchase is made under a milk purchase contract that complies with the requirements of these Regulations.
(2) A milk purchase contract must contain all the express terms relating to the purchase.
(3) A milk purchase contract must contain a term that requires the business purchaser to act in good faith in relation to the contract.
(4) A milk purchase contract may not contain any terms that are contrary to the provisions of these Regulations.
(5) A milk purchase contract containing terms agreed to by a representative organisation on behalf of the producer must contain the name of the representative organisation.
PART 3
Format and duration of milk purchase contract
Format of a milk purchase contract
4.—(1) A milk purchase contract must—
(a)
(a) be in writing; and
(b)
(b) be signed by all parties to the contract.
(2) An electronic signature is sufficient to satisfy the requirement in paragraph (1)(b).
(3) An “electronic signature” is so much of anything in electronic form as—
(a)
(a) is incorporated into or logically associated with any electronic communication or electronic data; and
(b)
(b) purports to be so incorporated or associated for the purposes of being used in establishing the authenticity of the communication or data, the integrity of the data, or both.
Duration of milk purchase contract
5.—(1) A milk purchase contract must be—
(a)
(a) a fixed-duration contract; or
(b)
(b) an evergreen contract.
(2) A “fixed-duration contract” is a milk purchase contract that will terminate—
(a)
(a) on the expiry of a specific period; or
(b)
(b) on a specified date.
(3) An “evergreen contract” is a milk purchase contract that will continue until one of the parties terminates it.
(4) The milk purchase contract must state whether it is a fixed-duration contract or an evergreen contract.
(5) A milk purchase contract must specify the date on which the obligation to supply milk commences, if this is different from the date on which it is signed.
PART 4
Pricing and payment
Permitted pricing
6. A milk purchase contract must use—
(a) a fixed price;
(b) a variable price; or
(c) a combination of a fixed price and a variable price.
Use of a fixed price
7.—(1) Where a milk purchase contract uses a fixed price (whether or not in combination with a variable price), it must do so in accordance with this regulation.
(2) A “fixed price” is a price, set out in the milk purchase contract, that—
(a)
(a) is expressed per unit of milk or milk constituent; and
(b)
(b) will be paid by the business purchaser to the producer for milk supplied under the contract.
(3) The milk purchase contract may set out more than one fixed price within the duration of the contract.
(4) The milk purchase contract must specify—
(a)
(a) the period within the duration of the contract to which each price relates; and
(b)
(b) the date on which each period begins and ends.
(5) The milk purchase contract must set out a procedure by which the price may be reviewed where exceptional market conditions occur.
(6) The milk purchase contract must set out what constitutes exceptional market conditions for the purpose of the procedure referred to in paragraph (5).
(7) The procedure referred to in paragraph (5) must provide that, where requested by the producer, the business purchaser must, within 30 days beginning with the date on which the request was made, invite the producer to enter into a discussion with the purpose of—
(a)
(a) reviewing the price payable under the milk purchase contract at the time of the exceptional market condition occurring; and
(b)
(b) where both parties agree, changing that price.
Use of a variable price
8.—(1) Where a milk purchase contract uses a variable price (whether or not in combination with a fixed price), it must do so in accordance with this regulation.
(2) A “variable price” is a price per unit of milk or milk constituent that is not fixed at the point that the milk purchase contract is made but is determined—
(a)
(a) in accordance with; or
(b)
(b) by the business purchaser with reference to,
factors set out in the milk purchase contract.
(3) Where the milk purchase contract makes provision in accordance with paragraph (2)(b), it must provide that the business purchaser must have due regard, as far as it is reasonably practicable to do so, to only the factors set out in the milk purchase contract when determining the price per unit of milk or milk constituent.
(4) The milk purchase contract may provide for the price per unit of milk or milk constituent to be determined by reference to more than one set of factors within the duration of the contract.
(5) Where the milk purchase contract accords with paragraph (4), it must specify—
(a)
(a) the period within the duration of the contract to which each set of factors relates; and
(b)
(b) the date on which each period begins and ends.
(6) The milk purchase contract must provide how often the price per unit of milk or milk constituent is to be determined, which is to be—
(a)
(a) not more frequently than monthly; and
(b)
(b) not less frequently than every three months.
(7) After the price per unit of milk or milk constituent is determined under the milk purchase contract, the producer may by written notice request that the business purchaser give them a written explanation as to—
(a)
(a) how the price was determined; and
(b)
(b) where the price per unit of milk or milk constituent is to be determined by the business purchaser, how the factors to which the business purchaser is to have due regard influenced the price.
(8) The notice described in paragraph (7) may be given once each time the price is determined.
(9) The business purchaser must give the explanation requested in the notice within 7 days beginning with the date on which the notice described in paragraph (7) was...
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