The code regulates the conduct required in the commercial relationships between farmers and milk processors. It aims to improve the clarity and transparency of trading arrangements between dairy farmers and those buying their milk, and in doing so create greater market transparency and competition.
The Federal Government has established a dairy code review reference group to support the review process, which is now under way.
The government is inviting feedback on the code from farmers, processors, industry representative bodies, government agencies, and consumer organisations until August 15.
The review will assess the role, impact and operation of the code, and determine whether it is operating as intended and delivering improved outcomes for the dairy industry.
Establishment of the Dairy Industry Code was a recommendation of the Australian Competition and Consumer Corporation inquiry into the dairy industry in 2018.
The inquiry found imbalances in bargaining power at each level of the dairy supply chain.
Some of the key elements of the code included:
– Requiring processors to publicly release standard forms of agreement by June 1 each year;
– Requiring all agreements to be in plain English (or contain a plain English overview) and consist of a single document;
– Requiring all agreements to set out minimum prices;
– Requiring a cooling off period of 14 days for farmers after signing a contract;
– Prohibiting retrospective step-downs in all circumstances;
– Prohibiting unilateral prospective step-downs except in limited exceptional circumstances;
– Establishing a dispute resolution process; and
– Restricting unilateral changes to the terms and conditions in agreements.
The ACCC published initial observations on the operation of the code in December 2020, which indicated the code was making a difference to market transparency in the industry.
The Federal Government’s Department of Agriculture, Water and the Environment is managing the review process on behalf of the Minister for Agriculture and Northern Australia.
The minister will provide a review report to the Treasurer by December 31, 2021.