Australia is introducing a new mandatory dairy industry code, in a move to help farmers negotiate a fair price for their products.
A mandatory dairy code of conduct was recommended following the ACCC’s 2018 dairy inquiry, which identified imbalances in power between processors and farmers.
ACCC deputy chair Mick Keogh said: “We also identified a lack of transparency in contract and pricing practices, limiting the ability of farmers to compare offers from different processors and hence reducing competition.”
“We concluded that a mandatory code was the best way to address these systemic industry problems, so we are pleased to see that this has become reality.”
The ACCC will be responsible for enforcing the code and it will come into effect from 1 January 2020.
According to Australia’s agriculture minister Bridget McKenzie, the code has been developed and negotiated by dairy farming organisations across its eight dairy regions and will support farmers across Australia.
McKenzie said: “In line with feedback received from dairy farmers the code prohibits retrospective pricing step downs.
“It also prevents unilateral changes except in a narrowly defined set of emergency circumstances; it stops processors withholding loyalty payments from farmers who are changing processor; and it prohibits exclusive supply arrangements where other conditions would be to the detriment of dairy farmers.”
Due to other pressures on Australia’s dairy farmers, McKenzie stated that grants will become available to reduce fairy farmer energy costs, while farmers will be provided with legal advice and farm cooperatives will be set up.
Following 12 months of the code’s establishment, a review of its impact will take place.
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