The Dairy Code of Conduct is designed to address the imbalance in bargaining power between processors and farmers (Photo: C. Goodwin)

July 1, 2020

The Australian Competition and Consumer Commission says it is closely monitoring the introduction of the new mandatory Dairy Code of Conduct.

A statement from the ACCC on Tuesday said it was checking processors’ compliance with the Code and was ready to take enforcement action where appropriate.

The Dairy Code requires processors to only buy milk from farmers using compliant milk supply agreements, and to have published those agreements online before 2:00pm on June 1, 2020. Agreements must include a minimum milk price, among other conditions.

The ACCC says it has accessed more than 100 published milk supply agreements since June 1 and it appeared most processors published at least one milk supply agreement by the deadline.

However, the ACCC was undertaking a detailed review of compliance, which included assessing whether the terms of milk supply agreements complied with the code.

“The new code is designed to address a significant imbalance in bargaining power between processors and farmers,” ACCC Deputy Chair Mick Keogh said.

“Milk supply agreements offered by dairy processors must meet certain minimum standards, like including cooling off periods for farmers while not containing contract terms that were previously used to push risk on to farmers.”

“Dairy farmers now have more information than ever to help them make a choice of processor well ahead of the start of the new season.

“The ACCC is aware of concerns that certain processors allegedly failed to publish milk supply agreements by the specified deadline, and concerns about the content of some agreements, and is investigating these matters.

“We are actively engaging with farmers and processors and closely watching adherence to the code so it can deliver the intended benefits to farmers and the whole industry. We note that some processors have voluntarily changed their approach after being contacted by the ACCC regarding code compliance issues.

“As the dairy code is legally binding, breaches may result in enforcement action by the ACCC, including going to court to seek pecuniary penalties.

“This is why it is so important that processors and farmers are aware of the code’s requirements and comply with them. The ACCC will take very seriously instances where parties fail to do so.”

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