Dairy

Farmers win fairer contracts

By Country News

Dairy processors — including Fonterra, Parmalat and Lion Dairy & Drinks — have agreed to amend their milk supply agreements following concerns from Australia’s consumer watchdog they were ‘‘unfair’’.

The Australian Competition and Consumer Commission said it had been working with dairy processors over the past year to ensure terms in the contracts they offered farmers complied with laws enacted by the Federal Government in November, 2016.

‘‘Farmers should be getting a fair deal when they contract to supply milk to dairy processors,’’ ACCC deputy chair Mick Keogh said.

‘‘Assessing unfair contract terms in the dairy industry is complex and requires careful consideration,’’ he said.

‘‘Our work focused on terms in milk supply contracts that have the potential to cause the greatest harm to farmers.’’

Most processors have agreed to provide dairy farmers with the right to terminate their contract if the processor varies supply terms such as price or quality requirements, placing the farmer in a worse position.

The ACCC also raised concerns with some processors about lengthy notice periods for farmers to terminate their contracts, one-sided termination rights, broad indemnities and terms that restrict a farmer’s ability to lease a farm or sell their cattle.

‘‘The ACCC worked with each processor individually to ensure amendments did not disadvantage farmers,’’ Mr Keogh said.

‘‘Where we raised concerns, most processors worked with us to find a solution to better balance farmers’ rights under the contracts.’’

Most processors have agreed to provide dairy farmers with the right to terminate their contract if the processor varies supply terms such as price or quality requirements, placing the farmer in a worse position.

The move has been welcomed by Australian Dairy Farmers, who labelled the announcement ‘‘a win’’ for farmers who for too long had felt the pressure of unfair contract terms.

‘‘This is an important step in strengthening bargaining power for farmers, which was one of the key issues highlighted by the ACCC in the dairy inquiry,’’ ADF president Terry Richardson said.

The ADF said many issues had been addressed in a draft code of practice developed by the Australian Dairy Industry Council.

Dairy Connect chief executive officer Shaughn Morgan said the announcement paved the way for better balanced relationships between supply chain stakeholders.

‘‘As the industry progresses towards a new universal mandatory code of conduct governing stakeholder behaviour, we can see for the first time clear signs that commercial equity is in reach for farmers,’’ Mr Morgan said.