Dairy Code of Conduct

The Dairy Industry Code of Conduct is an industry code regulating the conduct of farmers and milk processors in their dealings with one another. The Code came into effect on 1 January 2020.

Dairy Code

The Dairy Industry Code of Conduct is an industry code regulating the conduct of farmers and milk processors in their dealings with one another. The Code came into effect on 1 January 2020.

Application of the Dairy Code and exemptions

The Dairy Code of Conduct came into effect on 1 January 2020. All milk supply agreements created, varied or renewed after this date are subject to the code. The Code applies to dealings between a dairy farmer and any corporation that purchases milk directly from them, including supermarkets, milk brokers, and cooperatives (which have a limited exemption in relation to open-ended agreements). The Code may apply to collective bargaining arrangements in some circumstances.

Good faith under the Dairy Code

Under the Dairy Code of Conduct, processors and farmers must deal with each other in good faith. Failure to act in good faith can lead to penalties for breaching the Code.

Key requirements for milk supply agreements

The Dairy Code requires processors to only purchase milk under a milk supply agreement. All milk supply agreements must comply with the Code.

Minimum price under the Dairy Code

The Dairy Code of Conduct has a number of sections that refer to the minimum price under a contract.

Step-downs under the Dairy Code

The Dairy Code of Conduct places significant restrictions on step-downs in milk supply agreements.

Publishing obligations under the Dairy Code

The Dairy Code requires all processors (other than those that meet the Code’s definition of a 'small business entity') that intend to purchase milk during the next financial year to publish standard forms of milk supply agreements (MSAs) and reports on disputes on their website before 2 pm on 1 June (Australian Capital Territory time).

Single document, plain English & unwritten agreements

The Dairy Code of Conduct requires processors to ensure that their milk supply agreements are a single document and either in plain English, or include a plain English overview. The Code allows parties to enter into milk supply agreements using either written or non-written (for example, verbal) means. Processors must also take all reasonable steps to seek acknowledgement from a farmer that a written record of a milk supply agreement is accurate.

Exclusive agreements under the Dairy Code

The Dairy Code of Conduct does not prohibit exclusive agreements. It does prohibit combining exclusivity with some obligations.

Enforcement of the Dairy Code

The Dairy Code of Conduct contains penalty provisions. Not complying with a penalty provision could result in the ACCC taking court action seeking a financial penalty for the breach, or issuing an infringement notice.

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