Code a part of the dairy puzzle, says one Gippsland producer

Federal budget papers show the government has committed to an $8.7 million, eleven-year roll out of the code, which regulated producers relationships with processors.

The roll-out will start with a $100,000 spend, next year, with plans to invest $2.1m to develop the code, by the end of the financial year 2022-23.

Crossley's Karinjeet Singh-Mahil said the central aspect of the Code was to ensure negotiations, on a milk price, were fairer.

"All it's going to do is make sure everybody behaves reasonably and fairly," Ms Singh-Mahil said.

But she said she realised writing a code was a complicated matter, which couldn't be done quickly.

"Farming is not a simple thing, the way things operate have become more and more complex and complicated," she said.

"They are trying to unravel all that, and it's no easy thing.

"The people who came out from the department seem to be doing a pretty darned good job, to try and understand all that complexity."

The consultation meetings had also brought up different aspects of the impacts of the code, which had not been canvassed at first.

"We wouldn't want it to be complete, at this stage.

"As we've gone on, it's given us a different perspective to look at the issues that have to be covered off, so we want it to be done properly."

Mr Schuler said departmental officials also had to work through a lot of anger.

"There is a lot of grief and venting they had to work their way through, a lot of farmers wanted to look back and find blame, but then they had to work out a good process to get information." Mr Schuler said.

Gippsland dairy farmer Raelene Hanratty said the dairy industry had struggled to recover from the 2016 crisis, due to a variety of reasons that made up the pieces to a very intricate puzzle.

"The government's Industry Code of Conduct initiative is but one piece of the puzzle," Ms Ranratty said.

"The puzzle can be put together again, but it will take much more than a Code of Conduct.

She described the code as a great start.

"I think the processors are self-regulating, fairly well now, and given the drop in milk production, they would be silly to upset farmers," Ms Hanratty said.

"This is a puzzle that has many pieces, and I would hope some of the funding is earmarked for further industry reforms.

"It would be good for industry advocates, especially a group of farmers, to be involved in the process, until the final outcome."

Ms Hanratty welcomed parts of the draft code, such as an agreed opening price announcement date for all processors, prevention of retrospective price step downs and withholding retrospective price increases.

"However the code cannot address arrangements between processors and retailers and is not investigating milk swaps between processors; transactions which could be construed as collaboration," Ms Hanratty said.

"So the code needs to be watertight on the clauses that make the processors accountable for strategies and risk aversion measures that, if enacted, do not put the burden of industry downturns or poor company decisions back onto the farmers."

She said management would be accountable for decisions and company practices and run their businesses accordingly, with the threat of consequences being a benchmark for strategies.

The Code came across as a document attempting to provide regulation in an unregulated industry; a puzzle far greater than just the relationship between the farmers and the processors.

"I don't believe the draft form is quite there yet or if, in fact, it will have the power to provide the security required to avert any future incidents similar to those which occurred in 2016," Ms Hanratty said.

"The government would do well to look at other pieces of the puzzle, such as our international trade deals and legislation which allows cheap imports of dairy products to dominate supermarket shelves." 

Chris Griffin, Moe, said he hoped the industry would have improved, by the time the code was introduced.

"I hope it's not too big of an impost on the companies in the exporting states, where we rely on a good opening price," Mr Griffin said.

"If the code puts restrictions on processors, it may mean companies become a lot more conservative in their opening price, which may have an impact on farmers' cash flow."

But he agreed the time delay was not of great concern.

"It's got to be right for all sectors of the industry and not benefit one, over another."

Larpent's Lachie Sutherland said the Federal government would have to be re-elected before any code could proceed.

"That's the first thing they need to achieve," Mr Sutherland said.

"I realise these things take time, but it's better than nothing."

He said an upturn in milk prices, which appeared to be happening, would take the heat out of the need for a code.

"It's a bit like a floor price - that was a good way to get the Labor Party into the headlines."

The Deputy Prime Minister Michael McCormack has defended the roll-out of the proposed mandatory Dairy Code of Conduct, saying the government was seeking a workable solution, to give primary producers the ability to make money.

Mr McCormack said it was important to spend the right money, in the right areas.

"For far too long, our dairy farmers have worked far too hard, and its a very tough industry to make ends meet." Mr McCormack said.

"That hasn't been helped by dollar a litre milk, and I know how much the Nationals, in particular (Agriculture Minister) David Littleproud have campaigned against that."

He said it was difficult when the Nationals coalition partners were facing pressures, to keep prices low.

"Some inner city colleagues have had pensioners banging down their doors, saying they only want to pay dollar a litre milk, in fact, they would rather pay less.

"For them, literally every cent counts."

But McCormack said dairy farmers were also having a very hard job, trying to make ends meet.

"We made some very good announcements in the budget, and we are trying to get a solution that is going to be manageable for all concerned, across the various states, with their varying conditions."