Contribution
My Lords, my thanks go to the Minister for her explanation of this statutory instrument, which we in the Liberal Democrats support. It represents a positive and necessary step towards addressing the deep-seated issues of fairness and transparency that have plagued our vital, world-leading pig sector. It is a welcome change in the wake of the painful crisis that gripped this industry from 2020 to the spring of 2023—a period marked by, as we have heard from other noble Lords, the Covid period, acute Brexit-induced labour shortages at processing plants, and soaring feed and Putin-induced energy costs outstripping farm gate prices and pushing producers to the brink. The statistics are stark, with losses exceeding £750 million collectively, as well as that awful period when more than 60,000 healthy animals were culled because they could not be processed.
Although the pig sector has a history of volatility, that particular crisis exposed a critical weakness at its heart: a risk/reward imbalance underpinned by commercially unclear and potentially harmful terms, especially for smaller producers, hindering their ability to budget, manage price fluctuation or invest for the future. These regulations are rightly designed to address this imbalance. They mandate written pig purchase contracts between buyers and sellers, setting out clear rules for pricing, contract duration and dealing with market fluctuations. This framework is crucial in rebuilding for them security, clarity and fairness.
The instrument makes necessary amendments to the Fair Dealing Obligations (Milk) Regulations 2024, addressing the unintended consequence described by the Minister that impacts on businesses with an internal democratic structure—typically co-operatives—and allowing for volume-based or tiered pricing in that specific context. We urge Defra and the Agricultural Supply Chain Adjudicator, which will enforce these regulations, to monitor this amendment closely to ensure that it is applied in the true spirit of internal democratic structures. I thank the National Farmers’ Union’s dairy team and the National Pig Association for their valuable briefings on this issue, which have informed our understanding of it. They have asked for specific reassurances on this issue.
While these regulations are welcome and necessary for the pig sector, they highlight a broader need. The Groceries Code Adjudicator was introduced—we are very proud of this—by the coalition Government. It was taken directly from the Liberal Democrat 2010 manifesto, but we regret that its powers to enforce were not sufficiently established when we left Government in 2015, and it still comprises only a handful of people.
Given the clear and continuing power imbalance between producers, processors, supermarkets and the food service sector, does the Minister have any plans to enhance the enforcement powers and capacity of the GCA, given that it is the potential referee in the supply chain? Indeed, will she consider the need for the GCA to be able to intervene in deals between farmers and processers, not just those directly linking to retailers? Producers must be able to raise issues, and we believe that anonymity is vital, given the potential fear of repercussions. We believe that third parties such as the NFU should be empowered to raise concerns and truly hold the more powerful parts of the industry accountable, so the adjudicator therefore needs some more effective tools.
As ever, I thank the Secondary Legislation Scrutiny Committee for its scrutiny of these matters. It would be interesting to get some clarification from the Minister on an issue raised by my noble friend Lord Pack, which was also in the committee’s report. It said:
“Defra has used a specific definition of what constitutes an electronic signature, rather than using or cross-referencing to what we understand is the more standard definition under section 7(2) of the Electronic Communications Act 2000”.
In other words, there is some kind of different use of electronic signature here. That is a technical query that it would be great to understand. The committee continued, saying that:
“The Department was unable to explain … the rationale”.
I am having a second go at that question, and I thank the Minister in advance for even struggling to find the answer.
Finally, we must avoid simply passing this SI and then moving on. Regulations such as these need to be subject to regular review to ensure that they remain fit for purpose. The flexibility within this SI must not be abused, and the Government must ensure that these regulations genuinely work for an industry of which we can rightly be proud.