News

Saputo, Fonterra clash on code of conduct

By Rodney Woods

FONTERRA AUSTRALIA and Saputo Dairy Australia have different views on whether a voluntary or mandatory code of conduct is the best way forward for the dairy industry.

Fonterra’s managing director Rene´ Dedoncker has called for patience when it comes to any changes to the current dairy code.

“We absolutely support the voluntary code and we just think it needs time to be tested,” he said.

“We need to give it space, give it an amount of time so we know it works before they move to a mandatory code.

“A mandatory code is a step too far, too soon, and will have unintended consequences that will make everyone risk-averse and potentially make more costs.”

Despite costs also being an issue for Saputo chair Lino Saputo, he is in favour of the Australian Dairy Industry Council’s recommendations.

“We continue to support the 11 points listed in the voluntary code of conduct put forth by ADIC, and believe this code should be mandatory for all processors — big and small,” Mr Saputo said.

“We believe that a mandatory code of conduct should be managed by dairy industry bodies and the supplier community.

“Our only concern in regards to a mandatory code of conduct is cost.

“We want to ensure its regulation/ enforcement isn’t onerous on the system.

“We are ready and willing to support its implementation in any way we can.”

Mr Saputo even provided a recommendation of his own.

“We would also like to add a provision stating that step-downs (and claw-backs) should be illegal.”

Australian Dairy Farmers President, Terry Richardson, says “there has been ongoing agitation around which direction the industry should head, which is only distracting us from achieving genuine reform."

Mr Richardson said the ADF recognised and supported the need for enforceable measures to protect farmers. He said the extensive consultation process, as part of the 12-month review of the voluntary code, would consider feedback from milk suppliers.

A stronger dairy industry Code of Practice would include a formal dispute resolution mechanism and penalties procedure to solve conflicts between farmers and processors, he said.

"We absolutely want to achieve the best outcome for farmers, which is why we are taking a thorough approach to strengthening the industry Code of Practice and presenting this to industry for consideration," he said.

The Australian Dairy Industry Council (the umbrella group for the ADF and processors) has engaged legal counsel to provide technical advice to be incorporated into a second version of the Code.

"We are extremely aware that the industry is waiting for an outcome of this review, but we must ensure all reasonable steps are taken to address the issues identified by the ACCC report in a way that assists farmers," Mr Richardson said.

“Whatever decision is made, this will be a significant step with long-term ramifications for the industry, so we must get it right.

"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."

Farmer Power executive officer Garry Kerr agreed with Mr Saputo.

“With more and more evidence of contracting practices that are exploitive of dairy farmers, some possibly illegal, it is clear that the existing voluntary code is not working,” Mr Kerr said.

“A mandatory code is needed to put some fairness back into the industry.”

As part of its 18-month review into the industry, the Australian Competition and Consumer Commission also called for the code to be mandatory.