Chapter 2: Fair Dealing with Agricultural Producers and Others in the Supply Chain Section 29: Fair dealing obligations of business purchasers of agricultural products
Section 29 provides the Secretary of State with the power to make regulations to introduce obligations that promote fair contractual relationships between primary producers, Producer Organisations, associations of Producer Organisations, produce aggregators and the business purchasers of their products. As the issues faced by different farming sectors vary considerably, the section will enable sector-specific as well as general regulations to be made, to improve principles of fair contractual practice across the whole industry.
	Subsection (1) empowers the Secretary of State to make regulations, including enforcement, imposing obligations on operators who buy agricultural products in the course of a business ("business purchasers") from "qualifying sellers" (defined in subsection (3)).
	Subsection (2) specifies that the powers under subsection (1) must be exercised to promote fair contractual dealing.
	Subsections (3) – (5) set out definitions for the purposes of the section. A "business purchaser" is defined at subsection (3)(a) as set out above, as a person who purchases an agricultural product in the course of business which includes the purchase of products of that kind. A "qualifying seller" is defined at subsection (3)(b). This includes a person carrying on an agricultural activity for the production, or in connection with the production, of the product. This category of qualifying sellers is intended to capture farmers and other primary producers. The other categories of "qualifying seller" are Producer Organisations and Associations of Producer Organisations, recognised under section 30 of the Act, and produce aggregators, insofar as they are not themselves Producer Organisations or associations of Producer Organisations. Produce aggregators are further defined at subsections (4) and (5) as purchasers from more than one qualifying seller which do not carry out any further processing of the product. "Processing" is defined at subsection (11) of the section and helps determine whether a business is a ‘produce aggregator’. The definition of produce aggregators in this section is intended to cover and protect smaller sellers who do not typically engage in thorough processing activities, rather than established purchasers who are more likely to hold a dominant market position.
	Subsection (6) sets out examples of the kinds of obligations that may be imposed on business purchasers under the section. This includes obligations to:
	use a written contract (subsection (6)(a)). This will aid transparency and certainty for those sectors, such as dairy, where it is appropriate;
	include, or not include, a term in the contract dealing with a particular matter (subsection (6)(b)). This will ensure that key elements of the commercial arrangement are specifically agreed by producers, and is particularly useful in respect of pricing mechanisms that could otherwise result in hidden premiums and deductions;
	include terms that make specific provision (subsection (6)(c)(i)). This means that the Secretary of State can specify the content of the terms to be included in a contract – for example, that notice periods for varying the contract may not be less than three months;
	comply with a set of principles and practices that promote fair dealing (subsection (6)(c)(ii)). For example, if a contract includes an exclusivity section, fair dealing principles could require that qualifying sellers is not be paid less for surplus product than if they sold the surplus to a third party.
	The list in subsection (6) is non-exhaustive. In certain circumstances, regulations under the section could also impose obligations which are not strictly connected to a term in the contract. These could be related to problematic behaviours which may typically occur before a contract is signed, or outside of the contractual agreement. As an example, a business purchaser may threaten a qualifying seller with commercial retaliation, such as threatening to remove the seller from their business’s approved supplier list in response to a qualifying seller querying the contract with a lawyer before agreeing to sign.
	Subsection (7) provides examples of the types of terms that could be regulated through the contractual obligations imposed under subsection (6)(b) and (c).
	Subsection (8) outlines the enforcement provisions which may be made under subsection (1)(b), such as investigating complaints and creating a robust appeals process. It is intended that obligations will be set out in sector-specific statutory codes, which will initially be introduced in the sectors where voluntary codes have been unable to significantly improve contractual relationships (for example dairy).
	Subsection (9) provides the Secretary of State with powers to delegate authority to another person. This will be used to enable an independent party to consider appeals provided for under subsection (8)(d).
	Subsection (10) specifies that regulations made under this section are subject to the affirmative resolution procedure.
	Subsection (11) contains further definitions relevant to this section.