Dairy farmers ‘commercially the most vulnerable’ small businesses - A Dairy Mandatory Code is Needed NOW

Family dairy farming was Australia’s most vulnerable industry sector in terms of its business relationships with processors and supermarkets, according to leading advocacy group Dairy Connect.

This was the message today from chief executive Shaughn Morgan reflecting on a statement this week by Australian Competition and Consumer Commission Deputy Chair Mick Keogh.

Shaughn Morgan said the ACCC commissioner had called for fairer, more transparent contract terms and more ethical conduct in respect of Australian small businesses dealing with bigger commercial entities.

In its latest Small Business in Focus report, Mick Keogh said unfair contract terms, misleading conduct and scams were the biggest issues affecting small businesses in Australia.

Shaughn Morgan said the ACCC had recommended a mandatory code of conduct for the dairy industry following a wide-ranging review.

“The commission criticised short-form industry supply contracts drafted by processors that left dairy farmers vulnerable to arbitrary price fluctuations while blocking them from changing to alternative processors,” he said.

Industry codes provided a range of important protections for small businesses and the ACCC is responsible for enforcing these codes, including the Horticulture Code, Food and Grocery Code, Franchising Code and Oil Code.

“At the beginning of the year, we named our priority focus areas to ensure small businesses have a level playing field to compete,” Mick Keogh said.

“We are honing in on unfair terms in business-to-business contracts and making sure industry codes are working in the way they are intended to offer small businesses protection where it is needed.”

To ensure restoration of trust, transparency and fairness, Dairy Connect strongly calls on the Federal Morrison Government and in particular, Federal Minister for Agriculture, David Littleproud MP, to immediately implement the recommendations of the ACCC final report into the Australian dairy industry.

“The time has come for the Federal Government to show leadership to ensure the sustainability of the Australian dairy industry and commit to the introduction of a dairy mandatory code. Australian dairy farmers deserve nothing else from its elected leaders”, Mr Morgan said.

“The majority of the State dairy organisations support a mandatory code and it needs to be introduced now”, Mr Morgan concluded.

 

From ACCC final report into the Australian dairy industry (at page 163):

“Responses from state farmer bodies and other farmer representatives mostly expressed support for the mandatory code. In general, they emphasised the lack of enforceability of the existing Voluntary Code and agreed with the ACCC’s view that measures are required to create industry change through enforcement and deterrence:

  • Port Curtis and Farmer Power described the mandatory code as ‘essential, given the extent of poor past practices’, and DFMC described it as ‘required’.
  • SADA ‘strongly agreed’ that the mandatory code be considered.
  • NSW Farmers described the move to a mandatory code as a ‘natural progression’, and both WA Farmers and QDO submitted that the voluntary code has not worked and that more action is required.
  • TGFA’s submission was supportive of the mandatory code on the basis that details of the code are clarified. UDV expressed reservations about the flexibility of the mandatory code and submitted it will not support the mandatory code without further analysis of its likely impact on the industry, although it recognised that the ‘strength of a mandatory code is desirable’.
  • Some farmer groups also suggested that the Voluntary Code be strengthened as an interim step.”