Dairy Farmers co-op penalised for code infringement

Dairy Farmers Milk Co-operative penalised by ACCC for dairy code of conduct infringement

Dairy
DEADLINE CRITICAL: ACCC deputy chair Mick Keogh says it is essential milk supply agreements are made public by the deadline set in the dairy code.

DEADLINE CRITICAL: ACCC deputy chair Mick Keogh says it is essential milk supply agreements are made public by the deadline set in the dairy code.

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The Dairy Farmers Milk Co-operative Limited has paid a penalty of $11,100 for infringing the mandatory dairy code of conduct.

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The Dairy Farmers Milk Co-operative Limited has paid a penalty of $11,100 for infringing the mandatory dairy code of conduct.

The Australian Competition and Consumer Commission issued DFMC with one infringement notice for allegedly failing to comply with its publishing obligations under the code.

The code requires most companies that buy milk from farmers to publish standard form milk supply agreements on their websites by 2pm on June 1 each year.

These agreements must cover all the circumstances in which the company intends to buy milk in the upcoming dairy season, so farmers can compare the minimum prices and contract terms on offer.

READ MORE: ACCC fines WA milk processor Brownes Dairy for breaches of Dairy Code of Conduct

The ACCC alleges that DFMC did not publish any of its standard form milk supply agreements for the 2021-22 dairy season on its website by the publication deadline.

DFMC, which is a large farmer co-operative that buys about 185 million litres of milk a year from more than 160 dairy farmers across Victoria, South Australia, NSW and Queensland, has since published all of its milk supply agreements on its website.

The co-op has apologised for the error, saying it is a strong supporter of the code and the principles underpinning its development.

"DFMC acknowledges and apologises to our farmer members and the ACCC for the breach," the co-op said in a statement.

"The technical breach related to publishing obligations as there was a delay of nearly an hour in sharing the standard form agreements on the DFMC website."

The dairy code (Competition and Consumer (Industry Codes - Dairy) Regulations 2019) came into effect on January 1, 2020.

"The dairy code imposes certain obligations on all companies that buy milk from farmers," ACCC deputy chair Mick Keogh said.

"While DFMC doesn't process milk, it was buying milk from member farmers to supply a processor, and so has the same legal obligations under the code.

"Failing to publish milk supply agreements on time makes it more difficult for farmers to access key information about the milk supply terms on offer.

"We know that many farmers have to make time-critical supply decisions in June each year."

DFMC said all its farmer members and interested parties had access to all farmgate milk pricing schedules and supply conditions by the 2pm deadline on June 1.

"We have worked openly and constructively with ACCC staff to address the issues raised in the infringement notice," it said.

"With a small management team, DFMC manages more than 20 different farmgate milk supply agreements and is now undertaking a review of all processes and timelines associated with the requirements of the code, with a view to making the necessary changes to ensure compliance in 2022.

"The DFMC independent director and chair of the audit and risk committee will guide this review process and present the outcomes to the DFMC board."

READ MORE: ACCC, Lactalis in Federal Court over milk contract breach allegations

Mr Keogh said the code was introduced to improve price transparency in the dairy industry, so it was essential agreements were made public by the deadline.

"The dairy code remains a priority for the ACCC, and it's important that milk processors and other milk purchasers understand the requirements of the dairy code and actively comply with them," Mr Keogh said.

"The ACCC is continuing to monitor compliance with the dairy code, and any breaches detected may result in enforcement action."

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