The dairy code has been in place since January 2020 to address the imbalance of power between farmers and processors. The code has been of benefit to dairy farmers and the industry, but there are several key issues that need to be addressed. The federal government is currently reviewing the code and QDO will put in a submission to this review, as should any interested dairy farmer.
QDO believes the primary areas that need to be addressed in the code review relate to minimum prices and long-term contracts, exclusivity clauses, average estimated payout, cooperative concessions, changes to contracts after June 1 and enforcement by the ACCC.
Long term contracts can be a positive for some farmers. However, the minimum prices must be commercially sensible with complete clarity for prices in all years of the contract.
There needs to be great clarity around non-exclusive contracts to ensure they are commercially sensible for both farmers and processors. Processors offering non-exclusive contracts that have pricing and supply clauses that are completely prohibitive for farmers are not genuine non-exclusive contracts.
It is difficult to accurately compare contracts offered between processors. Processors should be required to indicate average estimate payout to farmers on a per litre basis for each year of the contract.
Concessions to cooperatives should be removed so there is a level playing field for processors. This is also to the detriment of farmers who supply cooperatives.
Some processors release contracts on June 1 and then updated contracts are offered but not made public. The code needs to be clear that all contracts offered to farmers must be made public.
Enforcement by the ACCC has been a slow process and the reasons need to be explored and solutions implemented.