Dairy farmers say the code is working well, requires only minor changes

Processors have called for the Australian Competition and Consumer Commission to expedite a scheduled review of the code.

Australian Dairy Farmers president Ben Bennett said the processors had not clearly articulated their reasons, behind the need to bring the review forward.

"It's even more curious given some of the recent misinformation, suggesting the code is responsible for high retail dairy prices, and that this is in effect driving a high cost of living, as well as exacerbating the differential between high domestic prices and cheap imports from overseas," Mr Bennett said.

"All this suggests that processors are feeling price risk pressure and that it is the code itself that is protecting farmers from this risk being passed down the supply chain in the form of price step-downs this season."

The mandatory Dairy Code of Conduct imposes minimum standards on processors and farmers.

Since 1 January 2021, all milk must be purchased under a milk supply agreement and all milk supply agreements must comply the code.

In July, last year, the Federal court fined Lactalis $950,000 for Dairy Code of Conduct breaches

UDV president Bernie Free, Winslow, said he didn't understand why the processors were not happy with the code.

"They are complaining about price, but the code has no material effect on the price they offer us," he said.

"The code has a definition of how they offer the price, when, and in what form, but there is no correlation to the price they are paying.

"It is purely supply and demand, and the way a market should work."

Mr Free said UDV members had a fairly positive overall view of the code, but would like to see some small changes.

Strengthening the code in relation to dispute resolution and increasing transparency in milk supply agreements would assist farmers in ensuring long term profitability", he said.

He said the UDV wanted the most current version of a Milk Supply Agreement to be published, with a separate document recording changes since previous versions, to simplify matters.

"Farmers can work out the possibility of making a profit, or not, and whether they want to take that price, or change processors," he said.

"We just want transparency, so you just have the latest version sitting there and you don't have all the step-ups, over the month."

Mr Free said the UDV also wanted the cost of dispute resolution to be based on pro-rata turnover and producers be able to engage in multi-party talks.

Bamawm dairy farmer Ann Gardiner agreed that the processors were "jumping up and down" about the code.

"If anyone knows what the outlook for dairy products are it should be the processors - they should have more oversight of what they are expecting to happen in their markets and their contracts than the rest of us," she said.

"They announce the price, dairy farmers don't say 'you must pay us this amount' - if they have anyone to blame, it's themselves."

She said the code allowed the risk to be shared more evenly.

"We are in times when the milk pool has declined, processors would not have put out those prices, if they didn't think they could afford them.

"It puts the pressure back on processors to cut their cloth a bit leaner; dairy farmers have had to trim their costs, trim their costs for years and years and years.

"It doesn't hurt to have processors trim their cloth, as well, rather than push all the losses back onto the farm."

The code was not the cause of processors suffering, which was more a factor of international prices, she said.

"I think we would be foolish to jump in and make changes," she said.

Daniel Meade, Garvoc, said the code seemed to have a positive impact, since its introduction.

"It's a positive where there has been a lot of competition for milk and processors have been forced to come out and set a minimum, by a certain date, which gives everyone a much clearer understanding," Mr Meade said.

The code had also played a positive role in competition of milk, following the announcement of opening prices, he said.

Any review was an opportunity "fine tune things" but overall I think it's been positive for the industry.

"I just think it helps hold processors to account, it's been good, because we have seen better behaviour from the processors," he said.