Fair-go dairy contracts a ‘breakthrough’ – Dairy Connect

Advocacy group Dairy Connect today welcomed the Australian Consumer and Competition Commission’s breakthrough in effectively re-writing future supply contracts between farmers and dairy processors.

Big name processors Brownes Foods, Lion Dairy, Norco Co-op, Parmalat and Fonterra each agreed to amend terms in their milk supply agreements to address the ACCC’s concerns these were unfair to producers.

Dairy Connect CEO Shaughn Morgan said the announcement paved the way for better balanced relationships between supply chain stakeholders.

“We need to acknowledge the work of the ACCC and its Deputy Chair Mick Keogh,” he said.

“As the industry progresses towards a new universal Mandatory Code of Conduct governing stakeholder behaviour, we can see for the first time clear signs that commercial equity is in reach for farmers.”

Shaughn Morgan said retailers, processors, governments and consumers should remember that dairy farmers are still battling on-going drought and sky-rocketing cattle feed prices.

“Up and down the eastern seaboard and into South Australia thousands of family farms are battling the cruel reality of a long dry winter and spring as they head into a dusty, arid summer.

“The impact is being felt not only by family farmers and their workers but also by numerous rural and regional communities that have been built on the back of dairy production, processing and service delivery.”

The ACCC said today it had been working with dairy processors during the past year to ensure that contracts comply with the business-to-business terms law enacted by the Australian Government in 2016.

“Farmers should be getting a fair deal when they contract to supply milk to dairy processors,” ACCC Deputy Chair Mick Keogh said.

“Assessing unfair contract terms in the dairy industry is complex and requires careful consideration. Our work focused on terms in milk supply contracts that have the potential to cause the greatest harm to farmers.”

Most processors have agreed to provide dairy farmers with the right to terminate their contract if the processor varies supply terms such as price or quality requirements, placing the farmer in a worse position.

The ACCC also raised concerns with some processors about lengthy notice periods for farmers to terminate their contracts, one-sided termination rights, broad indemnities, and terms that restrict a farmer’s ability to lease a farm or sell their cattle.

“The ACCC worked with each processor individually to ensure amendments did not disadvantage farmers,” Mick Keogh said.

“Where we raised concerns, most processors worked with us to find a solution to better balance farmers’ rights under the contracts.”

Dairy Connect is looking forward to commenting upon the draft Mandatory Code when it is released by the Federal Government shortly and ensuring the Code delivers for the dairy industry generally.