Dairy

Code concerns

By Alana Christensen

More work needs to be done on a mandatory code of conduct for the dairy industry, with people in the industry concerned about the lack of detail in a draft of the code.

Although celebrated by Federal Agriculture Minister David Littleproud as an ‘‘industry-defining moment’’, one local dairy farmer said the draft was ‘‘vague’’.

The proposed mandatory code of conduct would apply to 5800 dairy farms across the country and an estimated 87 dairy processing businesses, and put a number of measures in place including requiring all processors to announce their milk price by a set date, implementing a dispute resolution and banning retrospective price step-downs.

However, Katunga dairy farmer Daryl Hoey said he didn’t believe a mandatory code would fix anything and even had the potential to cause more problems.

‘‘It addresses a couple of things that NSW and Queensland need, but I struggle to see how it will improve anything,’’ Mr Hoey said.

‘‘It’s way more complicated than what it needs to be, I never believed it was going to deliver much.

‘‘There’s a lot out there that might work, but there’s a lot that could make it even worse for southern states.’’

Although welcoming the plan to force all processors to announce their milk price by a set date, Mr Hoey said the draft ‘‘lacked a clear pathway forward’’.

A mandatory code of conduct encompassing all processors estimated the annual average cost to the industry at more than $900000 while the estimated average cost of taking a case to dispute resolution was $2500 per case. Preparation costs for each party could rise to $7875.

The cost of mediation was a source of concern for Mr Hoey, who also labelled costing figures ‘‘vague’’ and ‘‘rubbery’’.

‘‘The cost (of going to mediation) should never be prohibitive.

‘‘I would think with high feed and water prices that a lot of northern Victorian dairy farmers would have trouble scraping together a couple of K,’’ he said.

‘‘Any cost of implementing a code is a cost that would be borne by the farmers through a lower milk price.’’

Mr Littleproud said the draft code had been released to ensure everyone had the chance to have a say.

‘‘Milk levies come and go but the mandatory code would help balance the market power between dairy farmers and processors and improve farmers’ bargaining power,’’ he said.

Yet UDV president Paul Mumford has expressed concerns there is an insufficient level of face-to-face consultations.

He said given the significant nature of the reform, more consultations should be held in Victoria, which is home to more than two-thirds of the country’s dairy farmers.

If recommended, a mandatory code of conduct would need to be endorsed by Federal Cabinet and passed through parliament, with any future changes to a mandatory code needing to also be passed through parliament.

■For more information about the code and consultations, visit: haveyoursay.agriculture.gov.au/dairy-code-conduct or email: dairycode@agriculture.gov.au or phone 1300 044 940.

Draft Dairy Codes in's and out's

A mandatory dairy code of conduct would apply to all farmers and first purchasers of milk, and cover agreements of any length. The draft clauses would lead to changes to industry practice including:

■Preventing unilateral changes to agreements.

■Requiring that on a set date each year processors publicly release a standard form agreement that includes the minimum price (and a pricing mechanism for longer-term agreements) and covers the term of the agreement.

■Preventing retrospective price step-downs.

■Preventing arrangements with exclusive supply and two-tier pricing.

■Prohibiting processors from withholding loyalty payments if a farmer switches processors.

■Introducing a dispute resolution process.

Some issues raised during consultations were outside the scope of a code of conduct and could not be addressed in the draft code. These include:

■Re-regulating farm gate prices.

■Addressing pricing and contract arrangements between processors and retailers.

■Addressing milk swaps between processors.

■Developing multiple codes depending on geographic locations or whether processors supply domestic or export markets.

■Establishing an independent milk ombudsman to regulate aspects of the industry.