"Watered down" an understatement says UDV

"Watered down" mandatory code an understatement says UDV

Dairy
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The events of 2016 that the mandatory dairy code is meant to prevent happening ever again could be perfectly acceptable under the exposure draft, the United Dairyfarmers of Victoria fears.

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The events of 2016 could be acceptable under the exposure draft of the mandatory dairy code, the United Dairyfarmers of Victoria fears.

"The UDV is quite unhappy with the exposure draft as it currently reads," UDV manager Ashlee Hammond said.

"I would say 'watered down' is to put it mildly."

Among the Victorian lobby body's chief concerns is the possibility of 'prospective step-downs', where the price farmers are paid is reduced during a supply period.

"Option one in the draft code was that prospective step-downs would be prohibited," Ms Hammond said.

"That is what UDV supported and, unfortunately, it looks like if there's something that's out of the processor's control, that they may be granted.

"Retrospective are banned but prospective do appear to be within the remit of the code under certain circumstances.

"That's not something we would support given what happened with Fonterra in 2016 because that was a prospective step-down but the impact it had on autumn calvers was appalling and detrimental."

Asked whether that meant history could repeat itself, Ms Hammond said, "As it currently reads, one could see it that way, yes, but this is the exposure draft and we are very keen to have the federal Department take on board the feedback."

Under the exposure draft's terms, prices may be varied if the "circumstances are beyond the reasonable control of the processor", something the UDV rejects.

"What we don't want is, for example, one of the processors to explain to the government what happened in 2016 was actually reasons outside of their control and that's why they made those decisions," Ms Hammond said.

The exposure draft could also compromise the ability of farmers and processors to strike the traditional daily rolling contracts common in Victoria by requiring a fixed beginning and end to contracts that specified a particular date.

"UDV was really clear in our commentary to the federal Department that that flexibility needs to be maintained, especially for the Victorian industry," Ms Hammond said.

"I understand it is different for drinking milk markets and the like but, for Victorian contracts, we do not want to see prescriptive contract lengths.

"We want farmers to be able to maintain daily rolling contracts if that's what suits their business and we were really clear about contract term lengths in the submission."

READ MORE: Dairy code draft displeasure triggers more Hanson interventions

The UDV would also seek clarification from the agriculture department regarding clause 21, which stipulates that the quantity of milk supplied is specified in agreements.

"Farmers need to have flexibility with production to grow or, if seasonal conditions require, a reduction in milk production for a month that there should be flexibility within the code arrangements to do that," Ms Hammond said.

And when the code was breached, the UDV believed penalties needed to reflect the ability of the farmer or processor to pay a fine.

"Penalties should be proportionate to capacity to pay is the UDV position, so to have $63,000 for a multinational processor and $63,000 penalty for a farmer, is not what the UDV supports," Ms Hammond said.

"It would be detrimental to any farmer to have that kind of penalty put on them but, further to that, it's a slap on the wrist for processors."

Submissions on the exposure draft of the mandatory dairy code can be made online , by phoning 1300 044 940 or emailing dairycode@agriculture.gov.au before November 22 at 2pm.

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