Queensland dairy farmers call for dairy code of conduct alterations
Minimum milk prices and long-term contracts top the big-ticket items on a peak dairy-farmer lobby group’s list.
Queensland’s peak dairy group says minimum prices and long-term contracts need to be examined in the dairy code review.
The Federal Government started its review process of the Dairy Industry Code of Conduct in May, more than a year after the industry protocols were introduced.
The Australian Competition and Consumer Commission undertakes the task of implementing the code and has issued several fines for alleged breaches in the past 12 months.
Queensland Dairy Organisation chief executive Eric Danzi said the code has been of benefit to dairy farmers but there were several key issues that need to be addressed.
“The primary areas that need to be addressed in the code review relate to minimum prices and long-term contracts, exclusivity clauses, average estimated payout, cooperative concessions, changes to contracts after 1 June and enforcement by the ACCC,” he said.
“Long term contracts can be a positive for some farmers. However, the minimum prices must be commercially sensible with complete clarity for prices in all years of the contract.
“There needs to be great clarity around non-exclusive contracts to ensure they are commercially sensible for both farmers and processors. Processors offering non-exclusive contracts that have pricing and supply clauses that are completely prohibitive for farmers are not genuine non-exclusive contracts.”
The mandatory code was a recommendation of the ACCC’s 2018 Dairy Inquiry final report.
The inquiry found significant imbalances in bargaining power at each level of the dairy supply chain, particularly between farmers and processors.
Mr Danzi said it was currently difficult to accurately compare contracts offered between processors.
“Processors should be required to indicate average estimate payout to farmers on a per litre basis for each year of the contract,” he said.
“Concessions to cooperatives should be removed so there is a level playing field for processors. This is also to the detriment of farmers who supply cooperatives.”
Processors are required to list a minimum farmgate price to suppliers and potential suppliers on June 1. This year, a bidding war erupted following that deadline with processors placing offers and counteroffers up until July 1, the start of the current dairy season.
Mr Danzi said some processors release contracts on June 1 and then updated contracts are offered but not made public.
“The code needs to be clear that all contracts offered to farmers must be made public.
“Enforcement by the ACCC has been a slow process and the reasons need to be explored and solutions implemented.”
Public submissions have been extended by the Federal Agriculture Department to August 29 with more information available on the department’s website.
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