Draft Fair Dealing Obligations (Pigs) Regulations 2025

Chris Vince Excerpts

Tuesday 22nd April 2025 General Committees

[The Minister for Food Security and Rural Affairs (Daniel Zeichner)]

I beg to move,

That the Committee has considered the draft Fair Dealing Obligations (Pigs) Regulations 2025.

As always it is a pleasure to serve with you in the Chair, Ms Vaz. The draft regulations were laid before the House on 13 March.

Let me begin by paying tribute to the UK pig sector, which is a cornerstone of our food system and a shining example of British farming at its best. The sector is built on generations of hard work, innovation and pride. Whether that is our skilled producers raising health, high welfare animals, or our forward-thinking processors adding value and reaching global markets, the pig industry is delivering day in, day out. It is about not just food on our plates—although the quality, taste and consistency of British pork products are second to none—but rural jobs, resilient supply chains and our wider goal of national food security. The sector quietly underpins so much of what we rely on, and it deserves recognition and support.

We also have to acknowledge the challenges. As in many parts of agriculture, the pig industry is not without its imbalances, in particular between typically small producers and much larger consolidated processors. When those imbalances are not addressed, the risk of unfair practices can creep in. We saw that most starkly during the pig crisis of 2021: the strain on the system exposed the underlying vulnerabilities and, sadly, in some cases, it even led to welfare culling on farms—a devastating situation for any farmer. Many of us remember that period very clearly. I remember visiting farms at the time, seeing oversized pigs and talking to experienced people who told me, genuinely, that it was a dangerous situation, because of the problems we had got into.

[Chris Vince (Harlow) (Lab/Co-op)]

This may be a stupid question—there is no such thing; just a stupid answer. I looked through the draft legislation this morning. It struck me that there did not seem to be much mention of the welfare of the animal. I wondered whether that was an omission or it is covered in different legislation. Will the Minister clarify that?

[Daniel Zeichner]

There are no stupid questions, and that is an important one. Animal welfare is clearly important and, in fact, goes to the heart of that very point about when the sector was not working properly—it was the welfare issues that were most troubling for many people. My hon. Friend is absolutely right that many other pieces of legislation will be coming forward to deal with welfare concerns.

The crisis at that time—thankfully, such instances were limited—served to illustrate how important it is that the system should work better for everyone. That is why this draft statutory instrument is important. It protects and builds on the good practices already happening in the sector, but also goes further. It puts in place the kind of transparency and fairness that pig producers deserve, giving them more confidence and a fairer footing in the market. The regulations have been shaped in close consultation with industry, reflecting a process that began with a public consultation and continued through extensive engagement with stakeholders. The result is a statutory instrument that is both practical and proportionate. I am pleased that it has been welcomed by key voices across the sector.

The draft regulations establish a framework for fair and balanced supply contracts, with preserved flexibility to reflect how businesses operate, provided practices are clearly agreed and set out in writing. To support transparency, contracts should be in writing and include all terms relating to the purchase. While many in the industry already operate in that way, it is not universal, and written agreements are essential for clarity and accountability. However, a fully compliant contract is not always appropriate, in particular in spot market trades, so the regulations include an option for producers to issue a notice to disapply and to step outside the framework for particular purchases when that suits both parties. Where the regulations apply and a written contract is in place, several key terms must be clearly set out. Most importantly, contracts must specify expected supply volumes and remedies if those volumes are not met. That was a major point of failure in the recent crisis I just mentioned, and the new requirement will give producers and processors greater certainty and stability.

The draft regulations also promote pricing transparency. 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. Where prices are determined through internal or discretionary methods, additional rules ensure that farmers can understand how prices are set and raise concerns if needed. For many farmers, the ability to negotiate collectively, primarily through marketing groups, is a vital safeguard against imbalance. The regulations support that model, by ensuring that collective sellers benefit from the same protections as individual producers.

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. 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.

We recognise that even with clear rules in place, disputes can still arise. That is why contracts must now include a clear dispute resolution procedure. That will give farmers clarity on how to raise concerns with the processor, and confidence that those concerned will be handled fairly and consistently. To ensure proper enforcement, oversight will be provided by the Agricultural Supply Chain Adjudicator—ASCA. Acting on behalf of the Secretary of the State, the ASCA can investigate alleged breaches of the regulations that have not been resolved through dispute resolution. If breaches occur, it has the authority to impose fines, order compensation, or both.

This statutory instrument is the second to make use of the powers in the Agricultural Act 2020 to improve fairness in supply chain contracts, following the Fair Dealing Obligations (Milk) Regulations 2024. It also makes a targeted amendment to those regulations. After implementation, we were made aware of unintended consequences relating to the rules on tiered pricing in exclusive supply agreements. For businesses with shared ownership structures, moving away from exclusivity is challenging, as exclusive supply is often fundamental to their operating model. To address that, we have made a limited amendment to the regulations to permit certain practices that were prohibited for those types of businesses.

In closing, I hope that I have demonstrated why these changes are both proportionate and essential. They respond directly to the concerns that we have heard from producers, and in a way that supports best practice, maintains flexibility and creates a fairer, more transparent market for the pig sector.