Agriculture minister Bridget McKenzie has conceded it is highly unlikely a mandatory dairy code of conduct will be in place by the start of next year.
The federal government has been working on the code for more than three years but looks certain to miss its January 1 deadline.
Senator McKenzie said she would not rush the regulations to meet “some arbitrary time frame”.
“We either want to get it done quickly or we want to get it done right,” she told ABC radio on Tuesday.
“I am not going to rush to put out a code that is not going to be fit for purpose and not going to actually work in all eight of our (dairy) regions across the country.”
Pauline Hanson has called for the minister to resign over her “diabolical” handling of the dairy code.
The One Nation leader also took aim at Senator McKenzie, who is the Nationals’ deputy leader, because her party didn’t support a bill aimed at putting a minimum milk price in place.
Senator Hanson’s private bill, which was defeated 31 votes to 30 on Monday, would have tasked the competition watchdog with determining a base price for milk.
A mandatory code of conduct for the food and grocery industry – including dairy – would have also been established.
The One Nation leader is angry about the government’s draft dairy code of conduct, which is out for its third and final round of consultation.
“Senator McKenzie’s handling of this whole code issue has been diabolical, it’s an absolute dog’s breakfast,” Hanson said in a statement.
“I’m dumbfounded over what has been her incompetence on this matter; it beggars belief, so I think she has no option but to resign.”
Unsurprisingly, the agriculture minister rejected calls for her to resign.
The coalition has been working on the code since 2016, when dairy giants Fonterra and Murray Goulburn cut milk prices paid to Australian farmers.
The wording of the code has changed significantly since being released as an exposure draft in January.
Originally, it expressly prohibited the practice of retrospective price drops for dairy farmers.
It now states processors can change contract conditions if there are “circumstances beyond reasonable control”.
Dairy farmers are concerned regulations meant to protect them from unscrupulous milk processors could do the opposite.
McKenzie was repeatedly asked who asked for the words to be changed, but did not provide a direct response.
“That reflects the consultations we had prior to the election,” she said.
“That is the only reason for that change. No one asked for the wording to be changed.”