A key element of the proposed code of conduct which would prevent retrospective milk price changes, has been altered, Agriculture Minister Bridget McKenzie has conceded.
She also says the dairy code of conduct will not be in place by the start of next year.
The federal government has been working on the regulations for more than three years but now looks certain to miss its January deadline.
Senator McKenzie said she would not rush the rules to meet "some arbitrary time frame".
"We either want to get it done quickly or we want to get it done right," she told ABC radio on Tuesday.
"I am not going to rush to put out a code that is not going to be fit for purpose and not going to actually work in all eight of our (dairy) regions across the country."Pauline Hanson has called for the minister to resign over her "diabolical" handling of the dairy code.
The One Nation leader also took aim at Senator McKenzie, who is the Nationals' deputy leader, because her party didn't support a bill aimed at putting in place a minimum milk price.
"Senator McKenzie's handling of this whole code issue has been diabolical, it's an absolute dog's breakfast," Senator Hanson said."I'm dumbfounded over what has been her incompetence on this matter; it beggars belief, so I think she has no option but to resign.
"Unsurprisingly, the agriculture minister rejected calls for her resignation.The coalition has been working on the code since dairy giants Fonterra and Murray Goulburn cut milk prices paid to Australian farmers in 2016.
The wording of the code has changed significantly since being released as an exposure draft in January.Originally, it expressly prohibited the practice of retrospective price drops for dairy farmers.It now states processors can change contract conditions if there are "circumstances beyond reasonable control".
Dairy farmers are concerned regulations meant to protect them from unscrupulous milk processors could do the opposite.NSW Farmers Dairy Committee chairman Colin Thompson said processors should not be able to change prices in any circumstances."The dairy industry is in real crisis," he told reporters in Canberra.Queensland Dairyfarmers' Organisation president Brian Tessmann is also disappointed with the change.Senator McKenzie was repeatedly asked who sought the words to be changed, but did not provide a direct response."That reflects the consultations we had prior to the election," she said."That is the only reason for that change. No one asked for the wording to be changed."Labor's agriculture spokesman Joel Fitzgibbon will not let the matter rest."Bridget McKenzie needs to stand up today and explain who told her to water down the code of conduct," he told reporters in Canberra."One of the largest concerns is there will be this escape clause for processors."