ACCC warns on dairy processor conduct; poultry industry is next

The Australian Competition and Consumer Commission alert comes as Canberra flags prospects for a similar code to potentially keep chicken processors and retailers in line with tougher rules around contracts and pricing arrangements with their grower-suppliers.

Just six processors control 95 per cent of Australia's poultry meat market.

A $550,000 government grant to the poultry meat industry will fund investigations into establishing a code of conduct to improve price transparency and competition.

Agriculture Minister, David Littleproud, said a code could identify and provide solutions to increase price transparency and help address bargaining power imbalances between growers and processors.

The money is part of a $6m government push to make perishable agricultural goods supply chains more transparent after an ACCC inquiry into commodity supply chains recommended industries and governments explore how to improve price transparency.

"It's essential that growers can confidently negotiate fair and equitable contracts," Mr Littleproud said, noting conduct codes had increased transparency in other industries by promoting two-way data exchange.

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With the new dairy season's June 1 deadline nearing for processors to publish their milk payment contracts and prices for farmers, the ACCC warned it expected the companies to be fully aware of obligations to suppliers and the marketplace.

Given dairy's code of conduct had been active for two years the ACCC was now shifting its focus from education and engagement work to tougher enforcement strategies.

"Processors which don't comply with the code now face a greater risk of enforcement action," said ACCC deputy chairman, Mick Keogh.

The competition regulator was now conducting further processor audits and would start more compliance checks after the June 1 publication deadline.

A new processor checklist and updated guidance has also been drawn up to help summarise processors' key obligations under the code.

Notably, the guidance provides greater detail of the ACCC's interpretation of the code's "single document" requirement, as well as arrangements for co-operatives and collective bargaining groups, and what constitutes a "material breach" of a contract.

The ACCC also refers to rules around loyalty payments and other bonuses, and processors' requirements to publish dispute reports.

"If there are processors still unsure of their obligations under the code, we encourage them to seek legal advice as soon as possible," Mr Keogh said

"It's important farmers understand their rights and responsibilities under the code, too.

"In particular, farmers should resist being rushed, and should carefully consider all the offers available to them before signing a supply agreement."

He said dairy farmers needed to be aware that processor season price projections made at meetings or in processor communications were not necessarily guaranteed.

What really mattered was the minimum price detailed in a milk supply agreement.

Meanwhile, National Farmers' Federation chief executive officer, Tony Mahar, confirmed a series of chicken meat sector stakeholder meetings - both face to face and online - would be held in poultry farming regions so the industry could provide input to the market transparency project.

The meetings aimed to ensure a potential code reflected both the issues and opportunities in the poultry meat supply chain.

"Contract growers, processors, retailers, and other industry stakeholders will be able to provide feedback during the engagement process," he said.

"As well as establishing the purpose and objective of a potential code of conduct, industry engagement will help develop a road map for implementation."

The poultry meat sector development follows workshops were held with the chicken meat, dairy, horticulture, pork, red meat, seafood, and wine grapes sectors late last year which helped identify price and market transparency issues and explore processes to address them.

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