NPA press release: Defra commitments on pig supply chain reform will deliver for industry
6th Apr 2023 / By Alistair Driver
The NPA has welcomed Defra’s commitment to take action to repair what is widely seen as a broken pork supply chain.
The Department has today published a summary of responses to its consultation on contractual practice in the pork supply chain, setting out the next steps, which address most of the key asks NPA put forward in October 2022.
However, as expected, the powers are limited in the Agriculture Bill, so the NPA has stressed that the wider issues further up the supply chain, including the actions of retailers, must be addressed, too.
The NPA is pleased to see that Defra has agreed to take the following next steps, addressing the majority of the eight key asks NPA set out in the response:
- We will share our findings relating to the alleged negative consequences of market consolidation with the Competition and Markets Authority (CMA).
- The UK government will commence work developing regulations for pig contracts, using the regulation making power in section 29 of the Agriculture Act 2020 (this covers fair dealing obligations of business purchasers of agricultural products).
- These regulations will ensure written agreements are used between all producers and their buyers. We will work closely with industry to explore what other provisions, if any, should be mandated as part of these agreements.
- We will continue to engage with stakeholders to ensure that legislation works for all parts of the UK and incorporate special provision for differing circumstances, if necessary. Where there is no minister in place, as in Northern Ireland at present, we will continue to work closely with government officials.
- We will also develop regulations to collect and disseminate more supply chain data, particularly in relation to wholesale price transparency and national slaughter numbers. We will use the powers in sections 23 to 28 of the Agriculture Act to create such provisions in England. We will work with the devolved administrations on this issue, as this is a devolved matter.
Read the full summary of responses to the consultation HERE
Defra’s consultation, which closed in October, received a hugely impressive 374 responses from across the pig sector with the majority from independent producers, providing Defra with a clear mandate to pursue meaningful reforms.
NPA Chair Rob Mutimer said: “We are very pleased that Defra has taken on board the very clear messages from the NPA and the wider industry about what needs to be done to fix our broken supply chain.
“For too long, producers have been treated poorly and contracts have not been worth the paper they were written on – and we have seen some disastrous consequences of that behaviour over the past two years.
“We believe the measures set out today, including legal underpinning for contracts that delivers a fair transparent and negotiable contract system, will help deliver a fairer and more sustainable environment for pig producers.”
Defra has also committed to develop and collect more supply chain data, which will inevitably support the industry in understanding the market and forecasting.
NPA Chief Executive, Lizzie Wilson, said: “We are pleased with the pace Defra has worked at to get to this point and are keen that this policy remains a priority. They have also committed to working with industry on the next phase of policy development and NPA are happy to be fully engaged.
“But the bottom line is that, while legislative changes can set the framework for reform between the producer and whoever they have their contract with, real change must also come from within the supply chain. The Government alludes to this with their commitment to share their findings with the Competition and Markets Authority.
“But we have lost almost one-fifth of our pig breeding capacity as a result of two years of crisis. Pig prices might be rising, but pig producers are still hurting badly, with huge financial holes to fill, and confidence remains low.
“That will only change if pig farmers can see that retailers and processors have got the message that fundamental reform is needed if we are to secure supplies of high welfare, environmentally friendly assured Red Tractor British pork in the future."
Notes to editors
NPA’s eight key asks in our response to Defra’s review of contractual relations in the supply chain:
1) Contractual practice needs to be underpinned by legislation to ensure accountability and deliver change for all producers and processors.
2) Contracts should follow a framework to allow producers and processers/marketing groups to negotiate terms that work for both parties. We outlined four principles for contracts in line with the powers within the Agriculture Act 2020:
• Price needs to be fair, transparent and negotiable
• All parties should be able to negotiate a contract fairly
• One-sided clauses should be removed
• A mechanism for dispute resolution is essential.
3) Penalties for out of specification pigs should not deliver a negative or zero value when contracted pig numbers have not been fulfilled.
4) Better forecasting is needed to help inform business planning, including a mandatory monthly pig weaning survey.
5) Processors should submit details of their contracted pig numbers to Defra for price reporting purposes.
6) Full transparency is needed for price reporting mechanisms.
7) Retail, food service and wholesale businesses should formally report the volume of cuts, carcase utilisation and origin of pork on a regular basis.
8) Retail and food service companies need to commit to buying a reasonable proportion of the pig carcase and utilising more British pork from it for products within their supply chains to help improve carcase balance.