A report into the de-regulation of the dairy industry is calling for a suite of changes to the industry, including considering amending the Dairy Code of Conduct, establishing a minimum farm gate price for milk in each region and investigating price discrepancies in milk supply contracts.
Released in late March by the Senate Standing Committees on Rural and Regional Affairs and Transport, the report examined the profitability of the industry since it was deregulated in 2000.
The report made 14 recommendations including Dairy Australia increase its research, development and extension activities into tropical and subtropical dairy regions, require processors to pay a levy to fund Dairy Australia and that the Federal Government make the Food and Grocery Code of Conduct a mandatory code.
The report called on the government to investigate price discrepancies between exclusive and non-exclusive milk supply contracts, processors circumventing collective bargaining groups, and the fairness of pricing for multi-year contracts.
The committee also recommended the ACCC be tasked with investigating a mandatory minimum farm gate price for milk in each dairy region and the government consult with industry stakeholders to investigate a retail sales levy that would increase returns to farmers.
The report has been welcomed by Dairy Connect, who said dairy value-chain initiatives must underpin the future of the industry.
Dairy Connect Farmers Group president Graham Forbes said the report featured "substantive" recommendations.
“Future generations of dairy farmers will depend upon the actions taken in the coming months and years; as well as to ensure the future security of food/dairy production within Australia,” Mr Forbes said.
Dairy Connect chief executive Shaughn Morgan said that the Senate committee indicated it was sympathetic to the proposal for a royal commission into the dairy industry.
“However, the committee did not believe that a royal commission should be held at this time given recent ACCC inquiries into a mandatory industry code and perishable foods,” Mr Morgan said.
“While Dairy Connect is disappointed at this and we do not agree with this view, we will continue to advocate for an outcome that ensures that the appropriate recommendations put forward by the majority of the Senate committee are implemented.
“The recommendations, and the suggested amendments by the government Senators, have been put forward to provide a platform to continue to grow the national dairy industry.
“Dairy Connect hopes that the majority of the recommendations will attract bipartisan support within Federal Parliament after considered discussion and debate.“After 10 major reports into the dairy industry since 2010, the national dairy industry remains at a crossroads and we must ensure that the dairy value-chain works cohesively to act in the best interests of the entire Australian dairy industry.”