Farmers and processors need to know their dairy code rights and obligations

26 May 2020

The ACCC is encouraging dairy farmers and milk processors to make sure they understand their rights and obligations under the Dairy Code as the publishing deadline approaches for milk supply agreements.

The mandatory industry code of conduct, which came into effect on 1 January 2020, requires most dairy processors to publish on their websites by 1 June 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 co‑operatives, 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.”

Farmers or processors can contact the ACCC on 1300 302 021 to report alleged non-compliance.

“We would also encourage farmers to have a close read of these agreements once they are published, and to take the opportunity to compare the agreements offered by different processors,” Mr Keogh said.

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,” Mr 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.”

Background

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.

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