Dairy compulsory code
INTRANSIGENT behaviour by some milk processors has prompted the Australian Competition and Consumer Commission to push for a mandatory dairy code of conduct.
A voluntary code of conduct was introduced by the dairy industry last year in the aftermath of 2015-16 farmgate milk price cuts but the ACCC believes the issues raised in its 226-page Dairy Inquiry interim report released this week were serious enough to make it compulsory for processors to sign up to a new code within the Competition and Consumer Act 2010.
ACCC agricultural commissioner Mick Keogh said the voluntary code of conduct had changed some processors’ behaviour, but because there was nothing that required them 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.
“When you look at that you think: well, yes, behaviour has changed.
“The question we have is whether that is more a permanent thing or whether a mandatory code would be needed to make sure some of those changes become more permanent and some other changes also come about which we have suggested in the report.”
The ACC said the mandatory code could include obligations on processors to enter into written contracts for milk supply.
It might also include requiring processors to provide timely and transparent information about the terms of those contracts, such as an income estimation resource guidance and commitments regarding price changes during a season for non-fixed price contracts.