Regulation 8 Use of a variable price
Where a milk purchase contract uses a variable price (whether or not in combination with a fixed price), it must do so in accordance with this regulation.
A “variable price” is a price per unit of milk or milk constituent that is not fixed at the point that the milk purchase contract is made but is determined—
in accordance with; or
by the business purchaser with reference to,
factors set out in the milk purchase contract.
Where the milk purchase contract makes provision in accordance with paragraph (2)(b), it must provide that the business purchaser must have due regard, as far as it is reasonably practicable to do so, to only the factors set out in the milk purchase contract when determining the price per unit of milk or milk constituent.
The milk purchase contract may provide for the price per unit of milk or milk constituent to be determined by reference to more than one set of factors within the duration of the contract.
Where the milk purchase contract accords with paragraph (4), it must specify—
the period within the duration of the contract to which each set of factors relates; and
the date on which each period begins and ends.
The milk purchase contract must provide how often the price per unit of milk or milk constituent is to be determined, which is to be—
not more frequently than monthly; and
not less frequently than every three months.
After the price per unit of milk or milk constituent is determined under the milk purchase contract, the producer may by written notice request that the business purchaser give them a written explanation as to—
how the price was determined; and
where the price per unit of milk or milk constituent is to be determined by the business purchaser, how the factors to which the business purchaser is to have due regard influenced the price.
The notice described in paragraph (7) may be given once each time the price is determined.
The business purchaser must give the explanation requested in the notice within 7 days beginning with the date on which the notice described in paragraph (7) was given.