FIGHTING BACK: A new mandatory code of conduct for the dairy industry will be enforced from January 1. Photo: Getty Images
FIGHTING BACK: A new mandatory code of conduct for the dairy industry will be enforced from January 1. Photo: Getty Images

Farmers gain protection under mandatory dairy code

FARMERS will be protected by a slew of measures to improve transparency and set

minimum standards of conduct in milk supply agreements under the dairy industry’s new

mandatory code of conduct, to come into force from January 1 next year.

The final code, unveiled today by federal agriculture minister Bridget McKenzie with the

support of national dairy advocacy group Australian Dairy Farmers (ADF) and all state dairy

farmer organisations, includes provisions that:

  • All parties must deal with each other fairly and in good faith.
  • Bans retrospective step-downs.
  • A cooling-off period is 14 days.
  • Stops processors from making unilateral changes to agreements, except when

    required to comply with legislative changes which cannot reduce the minimum milk

    price, or in certain exceptional circumstances that reduces the minimum price, with

    the processor required to notify the competition watchdog and farmer, who must be

    allowed to terminate the agreement if they wish.

  • Processors must publicly release a Standard Form Agreement on June 1 each

    year, covering the terms of milk supply and a price (or prices) that cover the terms of

    the agreement.

  • Bans exclusive supply arrangements between processors and farmers in

    combination with either two-tier pricing (where the second tier is less) or volumetric

    limits by processors.

  • Bans processors from withholding loyalty payments to farmers if a farmer

    switches processors.

  • Introduces a dispute resolution process for matters arising under or in connection with agreements.
  • Make civil penalties available for certain provisions imposing obligations on

    parties to an agreement to allow the competition watchdog to issue infringement

    notices, recognising in penalty regimes the respective size of processors and farmers.

The Australian Competition and Consumer Commission, which last year

recommended the dairy industry transition from a voluntary to a mandatory code, will be

tasked with monitoring and enforcing compliance with the code, consistent with its duties

under other industry codes of conduct, including, for example, the horticulture code.

ADF CEO David Inall thanked the Federal Government for listening to the concerns raised by

dairy industry representatives following the release last month of the exposure draft code of

conduct.

“The final code of conduct addresses our concerns and provides important protections for

farmers when negotiating milk supply agreements with their processors,” Mr Inall said.

“While the mandatory code will not be responsible for setting the farm gate milk price, it will

go some way to improving the bargaining power of farmers and professionalising contract

management in the industry.”


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