Mandatory Dairy Code of Conduct an essential tool to help dairy farmers get a fair price

Senator the Hon Bridget McKenzie
Minister for Agriculture

Australian dairy farmers now have a tough and fair rule book to help them negotiate a fair price for their product with a mandatory Dairy Code of Conduct taking effect from 1 January 2020.

Agriculture Minister Bridget McKenzie said Australia’s dairy farming organisations had worked hard to develop a Code that would support dairy farmers right across Australia.

“I want to thank each and every organisation for their constructive input in agreeing to the Code,” Minister McKenzie said.

“The mandatory Dairy Code of Conduct was a key recommendation from the 2018 Australian Competition and Consumer Commission (ACCC) Dairy Inquiry which found contracting and industry practices were weighted heavily in favour of processors.

“That’s why it has been so important for state dairy farming organisations and dairy farmers, from across our eight unique dairy regions, to detail the protections needed and to agree what is, and what is not, acceptable conduct in negotiations and in contracts.

“The final Code is different from the draft that was consulted on and is now a stronger, clearer document that delivers the protections it should for dairy farmers.

“In line with feedback received from dairy farmers the Code prohibits retrospective pricing step downs. It also prevents unilateral changes except in a narrowly defined set of emergency circumstances; it stops processors withholding loyalty payments from farmers who are changing processor; and it prohibits exclusive supply arrangements where other conditions would be to the detriment of dairy farmers.

“It also establishes a dispute resolution process, increases the powers of the Australian Competition and Consumer Commission in the space and introduces civil penalties.

“Whilst the mandatory Dairy Code is an important step forward for our dairy farmers in protecting their interests, it will not be a silver bullet for all the difficulties they are facing.

“Our dairy farmers are under real and sustained pressure because of the drought, high input costs for electricity, fodder and water, and a power imbalance in negotiating a fair farmgate price from processors.

“That’s why our government took a $22 million package of support measures to the election.

“We are making $10 million in grants available to upgrade or invest in energy efficient equipment to reduce dairy farmer energy costs and we’ve invested $8.1 million in additional funding to the ACCC’s Agriculture Unit and established a dairy specialist. The recent finding against Coles concerning its branded two and three litre milk is a demonstration of that at work.

“We’ve delivered $1.5 million to provide dairy farmers with contracting and legal advice including $560,000 to design, develop and test new milk pricing and trading concepts and we’ve provided $3 million in grants to support farmer groups to set up farm cooperatives and other collective business models.

“These measures, combined with our drought support measures are a comprehensive approach to achieving a viable future for Australia’s dairy farmers.”

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