Dairy industry groups have mixed views on the Australian Competition and Consumer Commission’s key recommendation of a mandatory code of conduct to replace the voluntary code.
The two major dairy bodies, Australian Dairy Farmers and the United Dairyfarmers of Victoria, are yet to commit to supporting a compulsory code to address contract issues between processors and farmers.
Meanwhile, alternative Victorian lobby group Farmer Power and NSW’s Dairy Connect have backed the introduction of a mandatory code of conduct.
The ACCC said a mandatory code could include obligations on processors to enter into written contracts for milk supply. It also said a mandatory code could ban retrospective step-downs — the practice that brought down Murray Goulburn.
ACCC agricultural commissioner Mick Keogh said the voluntary code of conduct had changed some processors’ behaviour, but because they weren’t obligated to change, some had continued with behaviours such as the “anti-competitive” loyalty payments.
“The issue we have is that when you look at the voluntary code, it is not mandatory and it does not have any penalties or indeed any mechanism to identify whether or not a particular participant in the industry is in breach of that contract,” he said.
UDV president Adam Jenkins said the voluntary code had already gone some way to addressing unfair contract terms between farmers and processors, “ but there could be more done to hold processors to account, as recognised by the ACCC,” Mr Adams said.
“It was an important first step in our process of improving the balance of power in the supply chain and the ACCCs analysis will be incorporated into our already established review process.”
ADF chief executive David Inall said ADF members would be consulted about their views in regards to a mandatory code but he didn’t have a “strong pulse” that this was what the industry wanted.
Dairy Connect chief executive Shaughn Morgan said his group backed a mandatory code. Mr Morgan said the group agreed with the finding that processors, under pressure from supermarkets and exporters, used their bargaining strength to shift commercial risks downwards onto dairy producers. Farmer Power’s executive officer Gary Kerr said the ACCC’s review found dairy farmers had little bargaining power.
“We support the ACCC’s call for a mandatory code of conduct to replace the recently introduced voluntary code,” Mr Kerr said.
Source: The Weekly Times