A NEW report from the competition watchdog recommending a mandatory code of conduct for milk processors has been cautiously welcomed by Tasmania’s dairy industry.
The Australian Competition and Consumer Commission dairy inquiry’s final report was released this week.
Tasmanian Farmers and Graziers Association dairy council chairman Andrew Lester said that while the organisation supported introducing a mandatory code, more information on what it would contain and extensive industry consultation would be needed.
“We all know the voluntary code isn’t working,” he said.
“The problem with a mandatory code is that once it’s drafted into legislation we don’t have a say in it … we’d need to make sure it wasn’t going to disadvantage producers.”
The ACCC found significant imbalances in negotiating power at all levels of the dairy supply chain, including between processors and retailers, but particularly between farmers and processing companies.
The report says processors have information about minimum prices farmers are likely to accept, suppliers do not have information about the maximum processors can pay.
While a voluntary industry code of conduct is being introduced, the ACCC says this is non enforceable and a mandatory code is recommended.
The report also highlights the need for an independent body to oversee disputes between farmers and processors.
It is an idea supported by the Australian Dairy Farmers group and the TFGA.
ADF president Terry Richardson praised the call for an independent mediator.
“It is vital that we have a mechanism to ensure farmers are protected in any disputes and this will form a central part of the current Code of Practice review process,” Mr Richardson said. “We recognise that there is some support for a mandatory code.”
However, he said the voluntary code of conduct, which is now being reviewed, was set up to bring industry together and develop an agreed set of values for processor contracts.
He said the ACCC’s analysis would be part of the ADF’s review process.
The report analysed the impact of $1 per litre milk and found farmer earnings remained the same, regardless of whether milk was sold as private label or branded milk.
Mr Richardson said $1 per litre was not sustainable in the long term.
Mr Lester agreed this issue needed more scrutiny.
“When you have milk at $1 a litre, that’s taking money out of the overall supply chain, so processors have less money to pay producers,” he said.
By: KAROLIN MACGREGOR
Source: The Weekly Times