Dairy code of conduct launches guaranteeing prices, banning retrospective cuts

| 13.12,19. 12:57 PM |

Dairy code of conduct launches guaranteeing prices, banning retrospective cuts

A dairy cow has her head resting on a gate looking over it directly at the camera.

The Federal Government hopes a new mandatory code of conduct between dairy farmers and milk processors, launched today and months ahead of schedule, will help level the playing field.

In announcing the code on Friday morning, Federal Agriculture Minister Bridget McKenzie acknowledged the code was not a silver bullet for the industry's many woes.

"We know right now in Queensland there are dairy farmers being pushed into five year contracts and not knowing what the price of their product will be at the end," Ms McKenzie said.

"That's unacceptable."

Processors will now have to let farmers know how much they will be paid over the life of a contract.

In recognition of the wrecking ball swung through the industry by Murray Goulburn and Fonterra, retrospective price cuts to farm gate milk prices will also be forbidden.

It includes improved dispute resolution processes for when things go sour between farmers and processors, with the ACCC now having the power to issue fines if the code is breached.

The peak dairy lobby Australian Dairy Farmers (ADF) said farmers could now be assured there was 'a cop' they can now turn to when they were being treated unfairly.

ADF CEO David Inall said a study that was three years in the making was critically important in identifying that the ACCC would be best placed to have the power to step in and oversee issues.

"Farmers want to know that someone has their back, that there's contractual clarity," he said.

Victoria lobby group United Dairy Farmers president Paul Mumford said the code is a positive step forward.

"This is a monumental day for the dairy industry. One of our key, top priorities as an industry has now been ticked off," he said.
Long road

Australia's 5,200 dairy farmers have been hit with soaring fodder and water costs that have not kept pace with farmgate milk prices.

As the effects of the 2016 price cuts from the major processors rippled through the industry, the Australian Competition and Consumer Commission undertook a detailed inquiry into the industry.

It examined, among other things, who had power and who bore the most risk and the impact of cheap supermarket milk on farmgate prices.

Among its key recommendations was a mandatory code of conduct between farmers and processors.

Early debate around a mandatory code was divisive, with industry in larger export-focussed states less keen on a binding code than fresh milk producing states like New South Wales and Queensland.

Throughout this year, many farmers were pessimistic about what a mandatory code would achieve.

But plans were accelerated when One Nation's Pauline Hanson started applying pressure on the Government for a dairy code to be implemented.

The code released today was originally slated to be finalised in March 2020.


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