A voluntary code of conduct has been agreed upon by dairy industry stakeholders, with the aim of promoting greater transparency within the market. Adam Jenkins, President of united Dairy Farmers of Victoria (UDV), called for the code of conduct to be put into place and it was agreed in early October over a meeting between milk processors and dairy farmer organisations.
“We’ve worked hard since the crisis unfolded in April to get everyone in a room to hash out our issues and put forward a case to ensure future milk supply agreements are balanced, fair and transparent,” Mr Jenkins stated.
“It’s been a long process to pin down the processors and get them to agree to meet with us, but with intervention from the Federal Government.”
Mr Jenkins is positive in regards to the influence the new code of conduct could have:
“We’ve been able to achieve a major step forward for the dairy industry in ensuring farmers are never again forced to retrospectively repay their earnings due to milk price cuts.” he said. “Now we’ll work together to develop a draft code of conduct which will improve transparency and business to business relations before unfair contracts legislation comes into force next month.”
Some of the primary factors this code will include are:
- Increased contract and supply agreement transparency
- Making certain that contracts clearly define pricing formulas and mechanisms
- Ensuring no retrospectivity will occur by including pricing adjustments for farmers within contracts
- Ensuring suppliers are made aware in good time if step-downs are due to take place
- Ensuring reasonable notice for contract termination
Mr Jenkins mentioned that the dairy industry plans to have the code’s finer details finalised shortly, prior to the Australian Competition and Consumer Commission (ACCC) handing down their industry report in 2017.
“The ACCC has been given unprecedented powers in its enquiry to force companies into handing over information,” he said.
“But Deputy Prime Minister Barnaby Joyce has made clear to us that our industry needs to work together to resolve a number of key issues or else the Federal Government may introduce measures we don’t want.”
Mr Jenkins mentions caution is required to avoid repetition of previous issues:
“No-one wants to see the milk crisis repeat itself, so it’s important we obtain clarity and simple clear pricing mechanisms in our future supply agreements and contracts.”
Organised by Australian Dairy Farmers, the local advocacy body, the meeting included representatives from every major dairy processor and ACCC Agricultural Commissioner Mick Keogh. Craig Latham, Deputy Australian Small Business and Family Enterprise Ombudsman, was also present.
We discussed a whole range of issues including claw backs, transparency, pricing, pricing mechanisms and adjustments, step-ups/step-downs, loyalty payments and many more. It is clear that moving forward, individual contracts will be much more transparent,” Mr Jenkins said.