IT’S been well over a year since the dairy sector was struck by the milk crisis and we’ve found ourselves at a crossroads, almost split between two industries.
On the one hand, those farmers who maintained their loyalty to their processor may have been the victim of savage milk price cuts. On the other, some processors maintained their prices to the benefit of their suppliers.
Either way, the milk crisis precipitated a dark period for the whole industry. Farmers who were loyal to their processor, even as they slashed the price of milk, felt overwhelmed with frustration.
In this climate, we have been faced with an immense challenge in restoring trust and confidence along the supply chain.
And it’s to the credit of the industry that over the past 16 months, we have been able to develop a solution. A new code of conduct endorsed by all players along the dairy supply chain, to ensure the fairness of supply agreements, came into effect on July 1. The aim of the code is to create balance and transparency within the industry and help farmers gain more control during contract negotiations with processors.
It’s important that contracts are fair, simple, realistic and easily understood by farmers and their processor.
For too long, there has been a “take it or leave it” mentality when it comes to negotiating supply agreements.
The code aims to fix this attitude as part of our plan to rebuild trust and confidence within the dairy industry.
The code will protect farmers by requiring processors to provide their suppliers with a clear milk price, a 30-day written notice period before any milk price step-downs, and a 90-day written notice period if a processor decides not to offer farmers on fixed term contracts a further fixed term.
But while the code is in itself a great achievement of the dairy industry, the real challenge will be ensuring that it is enforced.
The code was developed in collaboration with the Small Business Ombudsman with input from the Australian Competition and Consumer Commission.
But it’s up to us, as dairy farmers, to take ownership and hold the processors to honouring all the provisions.
It’s only by working together and holding each other to account that we will be able to reshape the dairy industry and repair our relationships.
Adam Jenkins, United Dairyfarmers of Victoria president