Dairy ‘relationship revolution’ now relies on the Federal Government - Dairy Connect

Prospectively, a great step forward for dairy producers’ - was the verdict today from Dairy Connect upon digesting the Australian Competition and Consumer Commission’s recommendations arising from its lengthy review of the national dairy industry.

Dairy Connect has been a publicly vocal champion of new initatives encompassing fairness, transparency and a mandatory code of conduct between the big dairy processors and dairy farmers.

The opportunity remains ripe for a ‘relationship revolution’ between processors and suppliers that could transform the national dairy industry and make it a model for fairness and equity internationally.

CEO Shaughn Morgan said the recommendations to the Federal Government included simplified contracts for milk suppliers which will allow farmers to take their milk to other processors, and a new mandatory code of conduct in relationships.

“Dairy Connect has been the leading advocate for the outcome and we congratulate the ACCC and its team on the great analytical work that forms the basis of the final report,” Shaughn said.

“The ball is now clearly in the court of the Federal Government to expedite enshrining these critical recommendations in new laws in full,” he said.

“The positive delivery and implementation of legislation towards securing a viable dairy future will require a collective effort, so we also call upon state and local government representatives to show their support for these ACCC findings”.

“The ACCC identified that producers had little bargaining power in their dealings with processors who held the whip-hand in terms of contracts, milk prices and surety.

“Within the confines of this one-sided commercial culture, there existed no independent dispute resolution process.

“The ACCC concluded that these and a raft of other issues were causing harm to the industry as a whole.”

Shaughn Morgan said that the consumer watchdog had called for a mandatory code of conduct to effectively regulate the nature of dealings between dairy processors and their fresh milk suppliers.

“The ACCC has said to Government that a mandatory code would reduce the frequency of market failure in the existing scenario and it is hoped that those that oppose a mandatory code will reconsider their stance in light of the benefits that will flow to the dairy industry,” he said.

“This reduction would arise from improvements in the quality of information, including price signals, reaching producers and bolstering competition by allowing dairy farmers to switch processors.

Chairman of the Dairy Connect Farmers’ Group, Graham Forbes, also commented on the importance of farmer awareness of the ACCC’s findings and the need for producers to take time to understand the report and the ways in which it may affect their operations.

“There are a number of key recommendations listed by the ACCC that are directed at farmers. The ‘Farmers’ Guide to the Final Report’ document released on the ACCC website is a great summary of the key issues raised and specifically highlights the farmer-directed findings” he said.

“Fundamentally, farmers need to be aware of the terms and conditions of their milk supply contracts and they needed to formally acknowledge these terms and conditions.”

The ACCC recommendations also said that processors needed to improve the transparency of their contract pricing terms.

“Processors should publish information identifying how their pricing offers applied to individual farms to enable more accurate farm income forecasts,” Shaughn Morgan said.

“An interactive online modelling tool would allow farmers to enter their individual production data and generate a reliable estimate of total income.”