Dairy code ensures fair, transparent contract
FARM gate milk prices won’t be changed retrospectively, and farmers will be entitled to sell excess milk to other processors under a new voluntary code of practice for dairy companies.
The Australian Dairy Industry Council launched the Dairy Industry Code of Practice for contractual arrangements between milk companies and farmers.
Dairy giants Murray Goulburn and Fonterra have joined Bega, Lion, Burra Foods, Freedom Foods, and Australian Consolidated Milk, Warrnambool Cheese and Butter and state farmer bodies from all dairy states as signatories to the code of practice.
The code sets out clear guidelines regarding pricing structures, loyalty payments and dispute resolution and will cover most of the milk produced in Australia.
“To further aid transparency it is important that contracts are fair, simple, realistic and easily understood by both parties,” the code states.
The code applies to standard form contracts between processors and farmers, but does not preclude a farmer from negotiating an individual contract with a processor.
“We believe the code will improve contracting arrangements between farmers and processors and offer greater transparency through earlier and clearer pricing signals for farmers, which means less risk for farmers and more balance along the supply chain,” ADIC deputy chairman Grant Crothers said.
ADIC said the code would ensure:
No retrospective changes to the milk price. Farmers receive full entitlements, including loyalty payments.
Farmers have permission to sell excess milk to an alternative factory if the processor to whom he or she is contracted does not want to purchase additional milk.
Fonterra’s managing director Rene Dedoncker said the company was already taking steps to improve the pricing signals for farmers.
“We’re committed to ensuring Australian dairy is sustainable and to working collaboratively with all those involved in it,” Mr Dedoncker said.
The code was established with input from state farmer representative groups, processors, the Small Business and Family Enterprise Ombudsman Kate Carnell and Australian Competition and Consumer Commission commissioner Mick Keogh.
The code will be reviewed after one year.
❝ We believe the code will improve contracting arrangements between farmers and processors and offer greater transparency through earlier and clearer pricing signals for farmers, which means less risk for farmers and more balance along the supply chain — Grant Crothers
CHANGE: Dairy giants, industry groups and farmers have signed a new code of practice.