More dairy sector conduct scrutiny needed after Senate report

Farmers want more dairy sector scrutiny by ACCC following Senate report


Agribusiness
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Farmers want the Australian Competition and Consumer Commission to make solid recommendations to restore transparency the milk industry

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Dairy sector lobby groups are keen to see the competition watchdog further scrutinise the effectiveness of Australia’s new voluntary code of practice between milk processors and dairy farmers.

NSW-based Dairy Connect has thrown its weight behind the recently released findings of the Senate standing committees on economics inquiry into the dairy industry.

United  Dairyfarmers of Victoria said it looked forward to the  Australian Competition and Consumer Commission (ACCC) making some solid recommendations to further restore trust and transparency to help repair the milk industry supply chain.

In total 12 recommendations emereged from the review, tabled as part of the Senate package, which was originally anticipated early this year.

The Senate Standing Committee on Economics report included a request to the  ACCC to reflect on how effectively the recently released Australian Dairy Industry Council’s voluntary Dairy Industry Code of Practice would address power imbalances between milk producers and milk processors.

Other recommendations included that the ACCC address the issue of whether milk supply contracts fall under the scope of unfair contract term laws. and that processors set opening prices conservatively to avoid retrospective price step-downs which have devastating impacts on dairy farmers. 

It also urged the government to prioritise action to reduce the regulatory burden across the cooperative sector and support programs to facilitate the establishment of new co-operatives

The Senate inquiry into the Australian dairy industry began following dramatic cuts to farm gate milk prices by processors Murray Goulburn (MG) Co-operative and Fonterra.

The subsequent clawback of money previously paid to farmers gave rise to a strident debate about contractual fairness in the industry.

The recommendations released late last week have been largely in line with Dairy Connect’s submission and face-to-face evidence given to the to the review by farmers group president, Graham Forbes, in Brisbane earlier this year.

The Senate review has been running parallel to a second inquiry being undertaken by the ACCC which is due to hand its report in November.

“The Senate committee has asked the ACCC to consider how collective bargaining by dairy farmers could be strengthened,” said dairy Connect chief executive officer, Shaughn Morgan.

“The Senate report  recommended any review of the voluntary Code for contractual relationships be conducted independently.”

“Further the report puts forward that industry organisations should team up with retailers to develop an ‘education campaign’ to promote awareness of the industry value chain so consumers were empowered to make more informed purchase decisions.”

Mr Morgan said careful consideration should also be given to the Senate recommendation that dairy processors set opening milk prices “conservatively”.

“This may help avoid the damaging price step-downs by MG and Fonterra which impacted dramatically on family farmers and entire regional and rural communities in the past 15 months,” he said.

“Importantly, it was recommended the ACCC address the challenge of unfair contract terms and advise whether short form milk supply contracts fell within the scope of the law relating to unfair contract terms.

“We support the recommendation that the government prioritise action to slash red tape for cooperatives and establish programs to facilitate the establishment of new cooperatives.

Dairy Connect remained supportive of the important and vital role that Dairy Australia provides to the dairy sector in research development and extension.

United Dairyfarmers of Victoria (UDV) also welcomed the recommendations, but felt the parliamentary committee missed a vital opportunity to address key inequities in the dairy industry, including the role of retailers in promoting the rise of discounted dairy products.

“Most of the committee’s recommendations reaffirm a lot of the work the dairy industry is already undertaking to improve transparency along the supply chain,” said president Adam Jenkins.

“However, we do note considerable time spent talking about retail pricing during the inquiry doesn’t seem to be properly represented among the recommendations.”

He said farmers hoped the competition watchdog would address concerns along the entire supply chain which were absent from the Senate committee’s report.

“This is a really good opportunity to have a lot of these concerns addressed and we’re looking forward to the ACCC report making some solid recommendations to further restore trust, transparency and to help repair the supply chain,” he said.​

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