News

Farmers say no to code

By Alana Christensen

“NO MANDATORY code, full stop.”

That was the message from one dairy farmer as consultation about a mandatory code of conduct for the dairy industry was held in Shepparton last month.

It was a sentiment echoed by many in the room, with a majority of farmers in attendance stating they do not support the measure.

A 40-strong crowd attended the consultation on November 27, run by the Department of Agriculture and Water Resources, yet many remained bemused and frustrated about the timing of the consultations, the small number of meetings being held in Victoria and the absence of a draft code to make comment on.

A key recommendation of an Australian Competition and Consumer Commission inquiry into the dairy industry, a mandatory code of conduct has received support from Federal Agriculture Minister David Littleproud.

But many dairy farmers say it cannot, and should not, go ahead.

A mandatory code of conduct would seek to address a number of issues including cooling-off periods when entering and terminating contracts, implementing a dispute resolution process, prohibiting retrospective step-downs and limiting exclusive supply clauses between processors and farmers.

Cobram East dairy farmer Paul Mundy was among those that attended the meeting and voiced his concerns.

“It seems absurd that this discussion has gotten his far,” Mr Mundy said.

A number of dairy farmers said it didn’t matter whether the mandatory code of conduct outlawed step-downs or allowed farmers to walk away from their contract when one occurred, as no other processor would take their milk in a downturn.

Katunga dairy farmer Bridget Goulding said she was disappointed at the amount of time that had been spent to rectify the effects of the 2016 milk price crash after Murray Goulburn implemented retrospective milk price step-downs, soon followed by Fonterra.

“All this expense because two dairy companies couldn’t get it together … Just pay us a fair amount … you don’t need a damn thing if you pay farmers fairly,” Ms Goulding said.

While the department attempted to ease concerns, stating the introduction of a mandatory code was yet to be agreed to, it did little to calm the crowd.

If recommended, a mandatory code of conduct would need to be endorsed by Federal Cabinet and passed through parliament.

Any future changes to a mandatory code would also need to be passed through parliament, leaving many in the room to express concerns that changes could take “years”, all when the current costs and potential consequences of the code are still unknown.

Following ACCC reviews of a number of issues — including petrol prices, telecommunications and energy prices — Katunga dairy farmer Daryl Hoey was pessimistic about the prospects of success.

“Why would I have any confidence in them to handle this?” Mr Hoey said.

It took more than four months for industry to agree to supporting a mandatory code of conduct, with processors, the Australian Dairy Products Federation and the UDV among those voicing concerns.

The Australian Dairy Industry Council, which comprises of Australian Dairy Farmers and Australian Dairy Products Federation, said a new mandatory code of conduct would help to clarify and strengthen relationships between farmers and processors.

ADIC called for retrospective milk price step-downs to be banned and contract disputes between farmers and processors to be handled through a thorough complaints and mediation process.

“Our aim is to address the information asymmetries that currently exist in the industry and strengthen bargaining power for farmers, while respecting commercial realities and supporting innovation and market dynamics,” ADIC chair Terry Richardson said.

The draft ADIC code is the result of an extensive review into the dairy industry’s current voluntary code and recommendations suggested by the ACCC.