At 1 January 2020, the Mandatory Dairy Industry Code became law to the benefit of dairy farmers. The South Australian Dairyfarmers’ Association (SADA) shares this article outlining the new law.
The final version of the Dairy Code of Conduct was released in mid-December and was universally welcomed by all state dairy farming organisations.
It was announced by former Federal Agricultural Minister Bridget McKenzie to help “level the playing field”,in response to the controversy surrounding the conduct of supermarkets and processors toward farmers.
Its implementation has been based on recommendations to the Australian Consumer and Competition Commission (ACCC) which found that in 2018 especially, significant and “unacceptable” imbalances in power ran throughout the supply chain.
The code will govern the relationship between milk processors and dairy farmers, as processors will now be required to tell farmers how much they are going to be paid over the timeframe of their contracts and post their standard form contracts on the internet. Moreover, all processors must make their prices public by the 1 June each year.
A huge win for the farmer is the banning of retrospective step-downs as well as the banning of prospective step-downs except for in exceptional circumstances. The exceptional circumstances provisions are extremely restrictive on processors. Moreover, if a processor seeks to engage a prospective step down it empowers the farmer to terminate the contract without penalty.
The ACCC has updated and improved its dispute resolution process and will now have the power to issue fines to processors if the code is breached.
The South Australian Dairyfarmers’ Association has welcomed the new code and has made substantial contributions to its substance.
For more information on the Mandatory Dairy Code of Conduct, or if you have any questions about supply contracts, please call SADA on 08 8293 2399.