The mandatory industry code of conduct, which came into effect on January 1, 2020, requires most dairy processors to publish on their websites by June 1 standard form milk supply agreements to cover all the circumstances in which they intend to purchase milk in the coming financial year.
The code defines those who buy milk directly from farmers (including cooperatives, retailers, and brokers) as processors, although some sections of the code will not apply where a processor is a small business entity.
The code spells out a number of requirements for milk supply agreements, including a minimum price for milk, a 14-day cooling-off period and a complaints handling process. It also requires processors and dairy farmers to act in good faith in their dealings with each other.
“We are reminding processors of their obligations to comply with the code, including by publishing relevant contracts on their website before the June 1 deadline,” ACCC deputy chair Mick Keogh said.
“The ACCC is responsible for enforcement of the code, and we will be checking for compliance. If farmers believe a processor hasn’t complied with their publishing obligations, they can contact the ACCC.”
Keogh said the ACCC was encouraging farmers to read the agreements closely once they are published, and to take the opportunity to compare the agreements offered by different processors.
The ACCC has published information on its website, including a fact sheet for farmers, to help ensure that all parties understand their rights and obligations under the new code.
“Our 2018 dairy inquiry highlighted a lack of transparency in contracting and pricing practices in the milk sector, and an imbalance in bargaining power between processors and farmers,” Keogh said.
“The new mandatory dairy code has been introduced to address these issues, and we want to see both farmers and processors engaging with it and ensuring they are complying with it in good faith to help address these issues.”
The Dairy Code came into effect on January 1, 2020, following development and consultation on it by the Australian Government. It applies to dairy processors (other than those that meet the Code’s definition of a small business entity) and farmers.
A mandatory dairy code of conduct was a key recommendation of the ACCC’s 2018 dairy inquiry, which found significant imbalances in bargaining power at each level of the dairy supply chain.