Milk processing companies call for assessment of voluntary code, before more regulation

Australian Dairy Products Federation president Grant Crothers said there were no surprises in the report, which made a number of recommendations on the relationship between farmers and milk processors.

The recommendations included a mandatory Code of Conduct.

“We urge against imposing additional regulation on the dairy industry before a proper assessment of the current Code of Conduct has been conducted,” Mr Crothers said.

“ADPF members worked collaboratively with industry to develop the current code and it must be given a chance to work.”

“As an industry, we knew from the outset that the voluntary code would be a ‘first cut’, which is why we had always committed to a review after twelve months to identify opportunities for improvement.”

Mr Crothers said it had been widely acknowledged it would be beneficial to have an independent arbitrator for more complicated contract cases, where a straightforward resolution wasn’t obvious.

“ADPF looks forward to working with industry to ensure a thorough and comprehensive review is conducted, with consideration of the ACCC’s recommendations where appropriate.”

“ADPF and its member companies will continue to work with Australian Dairy Farmers (ADF), under the auspices of the peak industry body Australian Dairy Industry Council (ADIC), to deliver a robust and effective voluntary Code of Conduct that ensures everyone in the dairy industry can share in the value.”

Australian Dairy Farmers president Terry Richardson said the organisation agreed with the recommendation to establish an independent mediator, as an important safeguard of farmers’ interests.

“It is vital that we have a mechanism to ensure farmers are protected in any disputes and this will form a central part of the current Code of Practice review process,” Mr Richardson said.

“We recognise that there is some support for a mandatory code. 

“However, we established the Code for the very reason that we could bring all of industry together in the one room to have an agreed set of values for processor contracts.

“ADF is taking a leadership role by reviewing the Code in consultation with our members, in line with a commitment we made when the Code was introduced, and we will incorporate the ACCC’s analysis into our review process.”

The report also analysed the impact of $1 per litre milk.

It concluded farmer earnings remain the same regardless of whether milk is sold as private label $1 per litre milk or branded milk.

“Our concern has always been that selling milk as a loss leader at the rear of the supermarket at price points cheaper than water is a strategy that is not in the long-term interest of this industry,” Mr Richardson said.

“Once money departs the supply chain, it is never returned.

“We have always strongly argued that $1 per litre milk is not sustainable long term.”

Mr Richardson said ADF remained frustrated that the report again failed to acknowledge the relationship between retailers and processors

But he said the dairy farmer group will work with the Federal Government and industry to ensure the Code presents a strong voice for farmers.

“The ACCC has again highlighted the significant imbalance in bargaining power at each level of the supply chain, and ADF will work closely with all parties to ensure the Code adequately protects the interests of dairy farmers,” he said.