Contribution
My Lords, I am grateful for the broad support for the regulations and for the contributions that have been shared on this instrument. There seems to be consensus that, even in a market that often functions well, as we have heard, it is essential to protect the smaller producers in the supply chain, so I welcome the support.
The specific requirements that are set out in the regulations—on volumes of supply, pricing, contract variation and termination—represent a significant step forward for the pig sector. Dispute resolution provisions will also support continued dialogue and collaboration across the supply chain. At the same time, the regulations are designed to protect and support existing good practice. I am confident they will strengthen the many successful relationships that already characterise the industry.
I turn now to some of the specific points that were raised. Some noble Lords talked about the different flexibilities that we have built into the regulations. I want to be clear that we are confident that they will not be easily misused. The reforms deliver a real and meaningful improvement in transparency for pig producers, which has often been lacking in the past. If the reforms are to be effective, they have to be proportionate and reflect the realities of how the sector operates, which is why we have built in flexibility. That does not mean we are going to be hands off in the approach to it.
I assure noble Lords that implementation is going to be closely monitored. If we find that the flexibility is such that the notice to disapply is being abused, or if the behavioural changes we expect do not materialise, we will not hesitate to revisit our approach and take further actions. The noble Lord, Lord Roborough, asked if we are going to be keeping an eye on it, and the answer is yes.
The noble Baroness, Lady McIntosh, asked about auction marts. First of all, pig sales through auction marts are quite limited but they will not be impacted. This is one area where the notice to disapply may be appropriate to use. If a notice to disapply is given to the business purchaser by the producer, the regulations do not need to be complied with for that specific purchase. I hope that helps to clarify that.
The appalling pig crisis of 2021 and 2022 was mentioned, particularly by the noble Baronesses, Lady Coffey and Lady Grender. Everyone in the sector wants to make sure that that does not happen again. As we have heard, at the time, there were a number of related factors, including the Covid pandemic, a lack of skilled butchers and declining export demand, and we ended up with a backlog of pigs on the market, which is why we had the awful cull that we witnessed. That was quite unusual, though, and it was quite difficult to avoid what was almost the perfect storm that built up at that time. We need to learn from it, which is why these regulations will make sure that farmers do not bear any disproportionate levels of cost when market challenges come up in the future.
The regulations outline that both producers and processors need to be clear about the levels of supply that they can expect in advance. That will be subject to negotiation between the parties, to maintain flexibility, and those agreeing a contract would be able to agree any tolerances for over and under supply levels. The new rules outline that contracts should say in advance what the remedies would be for either party when agreed levels of supply are not met by the other party. This could be a financial remedy, a change in future volumes that would be supplied, or a suspension of existing penalties; we need to look at each individual situation. What is important is that it will be open for negotiation between the parties, written down in advance and subject to change only by mutual agreement of both the farmers and processors alike. The whole point is to ensure certainty and transparency across the marketplace.
The noble Baroness, Lady Coffey, referred to the Cranswick incident and the difficulties around animal welfare and the breaches at that particular abattoir. The Animal and Plant Health Agency is investigating—it investigates every allegation that is reported to it. Obviously, I cannot comment on that because it is ongoing, but I reassure the noble Baroness that APHA is looking at that.