Slow journey toward industry reform – Dairy Connect

Australia’s dairy farmers continue to remain exposed to unfair milk supply agreements put forward by processors after Australian Competition and Consumer Commission handed down industry reform recommendations, in its final report released in April 2018.

Dairy Connect CEO Shaughn Morgan today called on the federal agriculture minister David Littleproud to fast track implementation of the key recommendations of the extensive ACCC review.

“The federal government must support its own statutory agency and immediately implement the recommendations of the ACCC,” he said.

“We need a sustainable dairy industry for the long-term.

“Dairy Connect will lobby strongly to ensure all the ACCC recommendations are supported and implemented.”

Dairy Connect backed the ACCC’s recommendation for a mandatory code to govern dairy supply chain relationships and commercial practices.

The call was a key recommendation in an interim report last November (and then in the final report) into the national dairy industry which had been announced in August 2016 and then commissioned by the federal treasurer Scott Morrison.

Shaughn Morgan welcomed the ACCC recommendations and described the need for change to address commercial power imbalances in the industry as ‘urgent’.

He said the recommendations reflected the reforms suggested by a Dairy Connect delegation to the ACCC in respect of a mandatory industry code of conduct and greater transparency and clarity in processor produced contracts.

“Effectively the review pointed to the fact the dairy producers languished at the bottom of a power relationship structure,” Shaughn Morgan said.

“The ACCC said a mandatory code should address bargaining power imbalances, improve price and production signals to farmers, stop practices that transferred risk inappropriately and enhanced the competition for farmers’ milk.

“This will be sweet music to the ears of dairy farming families around Australia today because they have borne the brunt of a commercial system that some may consider not that far removed from the tenant farming relationships of past centuries.”

Shaughn Morgan supported the analysis by ACCC that processors, under external pressure, used their bargaining strength to shift commercial risks downwards onto dairy producers.

The power imbalance was evident in the nature of contracts between the processors and farmers. The time for change is now.