Dairy industry stakeholders have agreed to a voluntary code of conduct, which the president of the state’s peak farmer body said he hoped would result in greater transparency.
United Dairy Farmers of Victoria (UDV) president Adam Jenkins called for transparency in all future dairy supply contracts, one of the areas’s covered in the code, which was thrashed out at last week’s meeting between dairy farmer organisations and milk processors.
“We’ve worked hard since the crisis unfolded in April to get everyone in a room to hash out our issues and put forward a case to ensure future milk supply agreements are balanced, fair and transparent,” Mr Jenkins said.
“It’s been a long process to pin down the processors and get them to agree to meet with us, but with intervention from the Federal gvernment.
“We’ve been able to achieve a major step forward for the dairy industry in ensuring farmers are never again forced to retrospectively repay their earnings due to milk price cuts.
“Now we’ll work together to develop a draft Code of Conduct which will improve transparency and business to business relations before unfair contracts legislation comes into force next month.”
The Code will include:
· Greater transparency in contracts and supply agreements
· Ensuring a pricing formula or mechanism is clearly defined within a contract
· Ensuring pricing adjustments to farmers throughout a contract are clearly defined and that there will be no retrospectivity
· Ensuring suppliers are given adequate notice if step-downs are to occur
· Ensuring that farmers receive all payments accrued over the term of a contract
· Ensuring processor exclusivity does not occur in cases where the processor has a contracted volume limit
· Ensuring a clearly defined mechanism for giving notice of contract termination
· Ensuring a clearly defined mechanism for modifying contract conditions, and giving farmers the right to negotiate variation
Mr Jenkins said the dairy industry planned to finalise the draft Code as soon as possible, ahead of the new legislation and before the Australian Competition and Consumer Commission (ACCC) hands down its report into the industry next year.
“The ACCC has been given unprecedented powers in its enquiry to force companies into handing over information,” he said.
“But Deputy Prime Minister Barnaby Joyce has made clear to us that our industry needs to work together to resolve a number of key issues or else the Federal Government may introduce measures we don't want.
“No one wants to see the milk crisis repeat itself, so it's important we obtain clarity and simple clear pricing mechanisms in our future supply agreements and contracts.
The meeting was organised by national dairy advocacy body Australian Dairy Farmers and included all major dairy processors, ACCC Agricultural Commissioner Mick Keogh, and Deputy Australian Small Business and Family Enterprise Ombudsmen Craig Latham.
“We discussed a whole range of issues including claw backs, transparency, pricing, pricing mechanisms and adjustments, step-ups/step-downs, loyalty payments and many more. It is clear that moving forward, individual contracts will be much more transparent,” Mr Jenkins said.
