Dairy farmers will be told how much they will be paid over the life of their contracts under a mandatory code of conduct introduced by Federal Agriculture Minister Bridget McKenzie on Friday.
McKenzie said she hopes the code will provide dairy farmers with greater certainty and bargaining power.
“Whilst the mandatory dairy code is an important step forward for our dairy farmers in protecting their interests, it will not be a silver bullet for all the difficulties they are facing,” McKenzie said on Friday.
“Our dairy farmers are under real and sustained pressure because of the drought, high input costs for electricity, fodder and water, and a power imbalance in negotiating a fair farmgate price from processors.”
The code forbids retrospective price “step downs” by processors and bans exclusive supply arrangements deemed detrimental to dairy farmers.
It also establishes dispute resolution processes, increases the powers of the competition watchdog and introduces civil penalties.
The ACCC has welcomed the new code, which was a key recommendation of its 2018 dairy inquiry.
The investigation found “significant imbalances in bargaining power” at each level of the dairy supply chain and a lack of transparency in contract and pricing practices.
“We concluded that a mandatory code was the best way to address these systemic industry problems, so we are pleased to see that this has become reality,” ACCC Deputy Chair Mick Keogh said.
The ACCC will be responsible for enforcing the mandatory code from January 1, 2020 and a review will take place after 12 months.
