Dairy News

Voluntary code “waste of time”

By Stephen Cooke

Prominent NSW dairy farmer Adrian Drury has labelled a proposed review of the voluntary industry code of conduct as a “waste of time, resources and energy”.
Mr Drury, the acting Farmers Group President of NSW farmers lobby group, Dairy Connect, said the Australian Dairy Industry Council (ADIC), which incorporates Australian Dairy Farmers and the processing sector, should back the ACCC recommendation for a mandatory code of conduct.
Mr Drury said the Australian Dairy Industry Council had “turned its back” on recommendations made by the ACCC following its 18-month probe into the dairy industry.
“The voluntary industry code currently operating has been an abject failure. It has died and should be put to rest,” Mr Drury said.
“If it was working, the industry would already have fair, balanced, plain English, milk supply agreements. It doesn’t.”
The scheduled review of the dairy industry’s voluntary code of practice, adopted last July by the ADIC and signed by a majority of processors, will proceed despite industry demands for a mandatory code to be adopted.
The code sets guidelines regarding pricing structures, loyalty payments and dispute resolution, and applies to contracts between farmer and processor.
State farmer bodies from all dairy states are also signatories to the code but most have now called for a mandatory code to be adopted, following the ACCC’s call for a mandatory code as part of its recommendations from its 18-month review of the dairy industry.
ADIC Chairman Terry Richardson said it committed at the launch of the code to undertake a review of its effectiveness after a 12-month period and that this decision would stand.
“ADIC is conducting a scheduled review of the Voluntary Code of Practice, which was agreed to by all state dairy farmer organisations,” Mr Richardson said.
It is expected the review will be complete by the end of June.
Australian Dairy Farmers (ADF) will then hold a series of forums aimed at educating farmers on how the ADIC recommendations will be implemented.
“The review will determine how effective the Voluntary Code has been and whether it is necessary to adopt a different approach. This could be a prescribed voluntary code, mandatory code or another mechanism altogether. Nothing is off the table,” Mr Richardson said.
As part of the process, the ADIC will analyse separate reports handed down by the Australian Competition and Consumer Commission (ACCC) and the federal Senate’s Economics Reference Committee (ERC).
The final ADIC report will include options to improve contract processes, increase price transparency, build industry capability and bolster the Code of Practice.
Mr Richardson said the review would involve stakeholders across the dairy supply chain to ensure the best outcome.
“The Code of Practice is a vital part of restoring relationships across industry,” he said.
“We want to ensure we get the Code right and the review process is the best way to achieve that outcome.
“At this stage it would be wrong to pre-empt the outcome of the review.”
Dairy Connect CEO Shaughn Morgan said the ADIC plan to convene forums to educate farmers on how the new ADIC recommendations would be implemented was “bureaucracy gone mad”.
“The ACCC has delivered a comprehensive report into the Australian dairy industry and its eight recommendations are straight-forward and should be supported across the industry.”
Katunga dairy farmer and member of the ADF National Council, Daryl Hoey, believes a mandatory dairy industry code of conduct will be subject to years of red tape and delays and may not improve the position of dairy farmers.
‘‘(The mandatory code) would be so difficult to change and that costs money and ultimately that would have to come out of dairy farmer’s milk cheques. I don’t see many advantages.’’
Processors have also called for the implementation to be delayed, with Fonterra telling the competition watchdog the voluntary code must be allowed the time to work.
A number of other processors, including Lion Dairy and Drinks, expressed concerns regarding how a mandatory code of conduct would be applied to differing business styles in the industry