Dairy farmers’ fury at processors’ template dairy code

DAIRY farmers have accused federal bureaucrats of using a processor-developed template as the basis for Australia’s first mandatory dairy code of conduct.

Code debate: ACCC deputy chair Mick Keogh (far right) says farmers need a mandatory dairy code. Picture: Lyndal Reading

DAIRY farmers have accused federal bureaucrats of using a processor-developed template as the basis for Australia’s first mandatory dairy code of conduct, which is meant to improve contracting practices.

Many of the 65 Victorian farmers attending consultative meetings at Camperdown, Shepparton and Maffra last week said bureaucrats presented them with the Australian Dairy Industry Councils draft as a “benchmark” or “template” on which to build a mandatory code for the industry.

Farmer Power advocate Alex Robertson, who attended the Camperdown meeting, said the department’s assistant secretary Jo Grainger made little mention of the Australian Competition and Consumer Commission’s recommendations and focused instead on the ADIC’s draft code.

“The problem is people think the ADIC is run by processors,” Mr Robertson said. “Everyone walked out saying the whole thing stank. It’s like it’s been set up to fail.”

United Dairyfarmers of Victoria acting president Paul Mumford, who attended the Maffra meeting of about 20 farmers, said his members remained opposed to a mandatory code, a view reinforced by the meeting.

He said Ms Grainger presented the ADIC code as a working template, but was relieved to hear a mandatory code would not go ahead unless it passed judgment via a regulatory impact statement.

“That’s the point where she told us we may not end up with a mandatory code,” Mr Mumford said. “It gave me the opinion that we may not end up with a mandatory code as we thought.”

There are key differences between the principles the ACCC wants enshrined in a mandatory dairy code and those outlined by ADIC, on dispute resolution, exclusive supply clauses and step downs.

A departmental spokesman said the ADIC’s draft mandatory code was being considered as part of the consultation process, but was not a benchmark for the final mandatory code.

Meanwhile the ACCC has reached agreement with Fonterra Australia, Brownes Food Operations, Lion Dairy & Drinks, Norco Co-operative Limited and Parmalat to amend unfair contract terms in their milk supply agreements.

The companies have agreed to amend contract terms to ensure farmers have the:

RIGHT to terminate their contract if the processor varies supply terms such as price or quality requirements, placing the farmer in a worse position.

REMOVE lengthy notice periods for farmers to terminate their contracts, one-sided termination rights, broad indemnities, and terms that restrict a farmer’s ability to lease a farm or sell their cattle.

ACCC Deputy Chair Mick Keogh said it had taken 12 months to negotiate the changes, something that could have been avoided if a mandatory dairy code was in place.

Mr Keogh said without a mandatory code there was nothing to stop processors reintroducing unfair clauses in the future.

The Federal Department of Agriculture did not respond to a request for comment.