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
- 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
- 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
“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.”