ACCC dairy report: Mandatory code of conduct is the key

The code was a key recommendation in the ACCC’s final report into the industry, handed down on Monday.

The ACCC said the current voluntary code had resulted in some changes but “does not offer an adequate long-term solution” to balance the farmer-processor relationship.

The United Dairyfarmers of Victoria and Australian Dairy Farmers supported the voluntary code, even after a mandatory code was proposed by the ACCC last November, a position in conflict with most state dairy industry lobby groups.

But yesterday, UDV president Adam Jenkins said the ACCC was a “more definite in its outcomes”.

“The UDV wants to advocate for making some change with the pricing structure and the removal of the imbalance of power,” he said.

“If the voluntary code can’t deliver that, the recommendation from the ACCC is to talk to the Government around the next step.”

Mr Jenkins said the ACCC recommendations were a chance to move towards simplifying milk supply contracts.

“We have not grown the milk pool and we are not more profitable,” he said. “Tell us why we shouldn’t change.”

ADF president Terry Richardson said a review into the voluntary code due to be completed by mid-year, but “we are more focused on outcomes rather than timing”. He said ADF and the Australian Dairy Industry Council didn’t support the mandatory code because it was committed to the review of the voluntary code and there “are too many unknowns with regard to a mandatory code”.

Fonterra said: “We believe it’s crucial that all processors comply with the industry-led voluntary code.

“The current code had been negotiated recently by industry participants, and it should be given a chance to work.

“In terms of our own business, we’ve said that chance is required in our industry and we have taken positive steps in our business to improve the way we work with our farmers, many of which are in line with the various recommendations outlined in the report — we’ve simplified our contracts, signed the code of conduct, we’re providing greater transparency on the impacts of market movements into milk price, and our farm price risk management offer has been in place for five seasons.”

Bega Cheese said it had not comprehensively reviewed the document or come to a position on any recommendations.

Its chairman Barry Irvin said: “It is important to note this enquiry was called as a result of the behaviour of Australia’s two largest milk processors who significantly reduced farm gate prices late in the 2015-16 financial year causing turmoil and hardship for farmers. Bega Cheese and many other dairy companies did not reduce their prices”.

Dairy Farmers Milk Cooperative said it supported a mandatory code. DFMC supplies milk exclusively to the processor Lion.

In a statement, DFMC chair Andrew Burnett said the introduction of a mandatory code would be vital to creating a fairer industry, in particular to provide a remedy in the case of disputes. “The mandatory code will also lessen the chance of disputes occurring, as all parties know that only genuine grievances will be addressed and resolved,” he said.

“DFMC is a long-term supplier to Lion Dairy & Drinks, with whom we have had dispute mechanisms in place for many years. Although it’s not been used for a number of years, it was an important element to ensure fair and constructive negotiations.”

By: SIMONE SMITH

Source: The Weekly Times

Link: https://www.weeklytimesnow.com.au/agribusiness/dairy/accc-dairy-report-mandatory-code-of-conduct-is-the-key/news-story/17ddba3ef907dd50aca74a2bb012bc5e

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