Dairy code will have extra clauses making it practical for farmers to sell to multiple customers at once

David Gillespie, the member for Lyne on the NSW mid-north coast, said Agriculture Minister Bridget McKenzie had agreed to the insertion of new clauses that would make it practical for farmers to sell their milk to more than one processor or customer at once.

"If we are going to facilitate getting a market where people can trade on to, you need to have the logistics measures in place that allow one vehicle to pick up product for multiple processors with one servicing processor doing the physical work," Dr Gillespie said.

"We need these causes explicitly stating the right to do that, so that they don't get stymied by saying you have to have a second vat for the goods that gets sold to another processor, or a separate additional trailer on the truck - so they can't tie people up in knots."

While it was fair for processors collecting milk destined for others to charge a fee, Dr Gillespie warned against gouging.

"They can't milk it too much but they can charge a reasonable per litre fee just like they do to the primary producer who currently they might get 58 cents per litre plus they pay 3c/L cartage and the net price might be 55 cents, or in some places, 40 cents plus cartage," he said.

The lack of transparency in markets to date had been a handbrake for the dairy industry.

'Every market is different because it's so opaque and obscure, the average guy can't find out what things cost," Dr Gillespie said.

"That's why a lot of people that are in finance don't want to invest in dairy because it's all this mumbo jumbo behind the scenes between a dairy farmer and a processor.

"I can understand historically worked out why because most processors were coops ... but now that there's very few coops ... and they have pressures put on them from the retailers and the poor old dairy farmer's left holding all the risk.

"Being able to forward sell or sell for short period of time, for a long period of time, on a screen where someone can see what milk's going for will help farmers.

"All these processors are now scrambling because people are going belly up and leaving, it'll actually help them too because they'll be able to get hold of product.

"They're killing the goose that laid the golden egg if they don't give a price that makes it viable for farmers.

"This drought has turbocharged what was a slow, painful decision to 'I have to do this because I'm going to have nothing left if I keep trading at a loss and I can't afford to buy water or grain or whatever'."

Peak dairy farmer lobby body, Australian Dairy Farmers, chief executive David Inall agreed non-exclusive contracts were important.

"The mandatory code should allow farmers to supply more than one processor," he said.

"One of the key findings in the ACCC dairy inquiry was that there was an imbalance in bargaining power between farmers and processors.

"This clause will give some of that power back to farmers, by providing them with options to supply multiple processors."

Mr Inall said both processors and farmers would benefit from more flexible supply arrangements.

"A transparent milk price helps farmers mitigate risk by providing the necessary information for them to prepare their budgets," he said.

"While we recognise the challenges of moving a fresh product like milk in regional Australia, we don't foresee any logistical barriers to making non-exclusive agreements viable.

"We hope the industry supports these clauses."