New mandatory dairy code welcomed

13 December 2019

The ACCC welcomes today’s announcement of the introduction of a mandatory dairy industry code by the Minister for Agriculture, Sen. The Hon. Bridget McKenzie.

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.

“Our dairy inquiry identified that imbalances in bargaining power between processors and farmers has allowed processors to transfer much of their risk onto farmers,” ACCC Deputy Chair Mick Keogh said.

"We also identified a lack of transparency in contract and pricing practices, limiting the ability of farmers to compare offers from different processors and hence reducing competition.”

“We concluded that a mandatory code was the best way to address these systemic industry problems, so we are pleased to see that this has become reality,” Mr Keogh said.

“We look forward to working with dairy farmers and processors as the new code is implemented. We will also be working closely with the members of our new Dairy Consultative Committee, to help ensure a smooth implementation.”

The ACCC will be responsible for enforcing the mandatory code, to come into effect from 1 January 2020. A review of the code’s role, impact and operation will take place after 12 months.

Background

In October 2016, the ACCC was directed by then-Treasurer the Hon Scott Morrison MP to hold an inquiry into the competitiveness of prices, trading practices and the supply chain in the Australian dairy industry.

The Dairy Inquiry final report was released on 30 April 2018. Recommendation 8 of the report proposed the introduction of a mandatory code of conduct for the industry.

Release number: 
243/19
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