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, 2020.
The final code, unveiled in December 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; and
• A cooling off period is 14 days.
It also 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.
Also, 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.
The code 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; as well as:
* Banning processors from withholding loyalty payments to farmers if a farmer switches processors;
* Introducing a dispute resolution process for matters arising under or in connection with agreements; and
* 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 (ACCC), 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 such as the horticulture code.