For many pig producers, the relationship with a processor is commercially vital but it has not always been recorded in a clear, balanced contract. Prices may depend on complicated formulas, expected numbers may change and long-established arrangements may rest on little more than conversations and custom.
The Fair Dealing Obligations (Pigs) Regulations 2025 are intended to change that.
The Regulations took effect for new pig purchase contracts in August 2025. From 13 August 2026, they also apply to existing contracts, unless the producer exercises the applicable right to opt out.
While some may view it as an administrative exercise, it represents a significant change in how risk, price and bargaining power are managed within the pig supply chain.
What do the Regulations require?
As the core to compliance and legal safeguarding is formalised arrangements, covered contracts must generally be written and signed. They must also address important matters including:
- The contract’s duration
- The number of pigs to be supplied or purchased
- How the price will be calculated
- When and how the agreement may be terminated
- What happens when exceptional events prevent performance
- How disputes will be resolved
These requirements are designed to give producers greater certainty before they commit animals, feed, labour and infrastructure to a processor.
Pricing transparency is particularly important. A contract may use a formula or refer to market data, but producers should be able to understand how the price is determined. A buyer should not have an unrestricted ability to change the calculation retrospectively or rely upon an unclear grading process.
Why does a written contract matter?
English law does not usually require an ordinary commercial contract to be signed. A binding agreement can arise verbally, through emails or from the parties’ conduct.
In RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH [2010] UKSC 14, the Supreme Court confirmed that the existence of a contract is assessed objectively. The court considers what the parties said and did, while their undisclosed intentions are given little consideration.
Some degree of flexibility can be useful, but uncertainty can arise when not properly managed. Was an annual figure a guaranteed quantity or merely a forecast? Was a pricing discussion a firm agreement? Could either party end the arrangement immediately?
Long trading relationships do not necessarily provide the answer. See my previous article for more information.
The new pig-sector rules reduce uncertainty by requiring key obligations to be recorded explicitly.
What happens if a buyer does not comply?
The Agricultural Supply Chain Adjudicator can investigate suspected non-compliance. Its enforcement powers include requiring compensation and imposing a civil penalty of up to one per cent of the pig buyer’s turnover.
This makes compliance a board-level issue that requires ongoing management instead of being overlooked until a dispute arises.
However, a written contract is not automatically a fair contract. Important questions remain that must be answered. These include:
- Is the pricing mechanism genuinely transparent?
- Can the buyer reduce contracted numbers unilaterally?
- Are termination rights balanced?
- Does “force majeure”, an exceptional event beyond a party’s control, cover disease restrictions or processing disruption?
- Can producers realistically negotiate?
- What are the consequences of opting out?
A wider change across agriculture
The pig Regulations form part of a broader movement towards fair dealing in agricultural supply chains. Similar protections already operate in the dairy sector, while further measures have been considered for eggs and horticulture.
It is now apparent that historic handshakes and informal understandings should be reviewed to ensure that agreements are fit for purpose. Producers and buyers need contracts that accurately reflect how their relationship works. These need to go beyond compliance checklists and serve the needs of all involved parties.
Good contracts cannot remove market volatility, disease or processing pressures, but they can make clear who bears those risks before problems arise.
Our specialist team can support you with compliance awareness so that you do not get caught out. Contact Natalie Dean today for help.