AustralianFarmers

Industry backs mandatory Dairy Code

Dairy products are a part of our daily lives and while you munch on your cheese toastie and enjoy your morning coffee, you may wonder how our dairy farmers are faring?

With the milk prices plummeting to an all-time low and significant power imbalances between large-scale milk processors, there hasn’t been much joy for dairy farmers.

The hard times have seen number of dairy farm businesses consolidate.  The recent drought has only served to compound these difficulties.

But, unlike their cows, the situation for dairy farmers is not black and white.

Pricing, drought, global market instability and processor power imbalances are some of the challenges Australian dairy farmers are facing.

Right now, dairy farmer’s woes may be easing or ramping up, depending on who you ask.

This week the Minister for Agriculture and Water Resources, David Littleproud sternly requested a united position on a Mandatory Code of Conduct for the dairy sector.

For sometime key actors (farmers, processors and government) in the Australian dairy industry have been locking horns over the proposed Code.

Processors, for example, have adamantly opposed the Code, stating more work should be done to strengthen the existing voluntary Code.

Other key dairy stakeholders have also expressed concerns that farmers may be left worse off through increased costs and regulation. Farmers were also anxious about being excluded from the consultation process.

Despite changes in the Code, don’t expect dairy prices to budge any time in the near future.

Heeding the Minister’s directive and in the interests of ending the stalemate Australian Dairy Farmers (ADF) – the peak body representing farmers – this week declared its support for the Code.

This was a difficult decision and one that ADF did not take lightly.

“There are a broad range of views within ADF’s membership and these views are deeply respected and understood,” ADF CEO David Inall said.

The Minister’s announcement came in light of a recent ACCC report. The report called for a mandatory Code and recommended a whole-of-industry approach to striking a balance between processors and farmers.

The ACCC report found that dairy farmers raised two key concerns:

  • contract and pricing practices lacked transparency and gave processors too much power; and
  • the impact of $1 per litre private label milk on the industry.
Dairy farmers are looking to strike a new balance with processors under a mandatory Code.

The new Code of conduct will set out to correct the large imbalance of power that exists between dairy farmers and processors. This imbalance has seen processors reduce prices and enforce contracts that prevent farmers from switching processors.

Despite the breakthrough this week, Mr Littlepoud said that the mandatory Code should improve bargaining power but was unlikely to change milk prices.

According to the ADF, the debate over the future of the industry has often been volatile. It is now calling for unity to deal with the immense challenges facing the sector.

What are your thoughts on the proposal for a mandatory Code? Will this help improve conditions for dairy farmers? Leave us your thoughts in the comments section below!
Andrea Martinello

Andrea Martinello

Andrea is the Community & Engagement Officer at the National Farmers' Federation.

2 comments

  • Farmers and Processors need to commit to a minimum 12 month seasonal (1st July to 30th June) mandatory contract.s.
    Farmers will be guaranteed by processors opening price with no claw back/ step down possibility
    Processors will have security of that milk for at least 12 months
    This will drive a great deal of stability and certainty in the dairy industry without the concern or a need to intervene in the market.
    To do nothing that is concrete will only feaster further division.

  • Code of conduct needs to be mandatory, in this time when greed and self interest are seemingly a major problem some processors will certainly not do the right and just thing for industry.

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