Mandatory dairy code of conduct

On 15 March 2019, the Hon. David Littleproud MP, Minister for Agriculture and Water Resources, announced the government will progress a mandatory code of conduct.

The code will cover nine principles to increase fairness and transparency between dairy farmers and processors:

  1. require parties to deal with each other in good faith and to operate with fair dealing by having due regard to the other party’s legitimate business interests
  2. prevent unilateral changes to agreements
  3. require that annually on a set date processors publicly release a standard form agreement covering the terms of supply and a price (and if applicable a pricing mechanism for longer-term agreements) that covers the term of the agreement
  4. prevent retrospective price step downs
  5. prohibit prospective step downs unless in specific circumstances such as force majeure, or exceptional market circumstances or major changes in global market conditions
  6. prohibit exclusive supply arrangements in combination with two-tier pricing
  7. prohibit processors withholding loyalty payments if a farmer switches processors
  8. introduce a dispute resolution process for matters related to contracts between farmers and processors, and
  9. alleged breaches of the code, to be investigated by the Australian Competition and Consumer Commission, which may include penalties for breaches of the code.

Next steps

Work will commence to draft regulations for a code of conduct, in the form of an exposure draft.

We will then begin a third round of consultation across the dairy industry to gather your feedback on the drafted regulation.

How you shared your ideas

We sought your feedback on draft clauses for a dairy code and potential regulatory impacts of a code over two consultation rounds. The first round of consultation opened on 31 October 2018 and closed on 28 November 2018. The second round of consultation opened on 15 January 2019 and closed on 15 February 2019.

We gathered your ideas through:

  • 18 public consultation meetings held in all dairy regions
  • one-on-one meetings with over 20 processors and industry representative bodies
  • two tele-town hall sessions
  • phone calls and emails from dairy farmers and other industry members.

On 15 March 2019, the Hon. David Littleproud MP, Minister for Agriculture and Water Resources, announced the government will progress a mandatory code of conduct.

The code will cover nine principles to increase fairness and transparency between dairy farmers and processors:

  1. require parties to deal with each other in good faith and to operate with fair dealing by having due regard to the other party’s legitimate business interests
  2. prevent unilateral changes to agreements
  3. require that annually on a set date processors publicly release a standard form agreement covering the terms of supply and a price (and if applicable a pricing mechanism for longer-term agreements) that covers the term of the agreement
  4. prevent retrospective price step downs
  5. prohibit prospective step downs unless in specific circumstances such as force majeure, or exceptional market circumstances or major changes in global market conditions
  6. prohibit exclusive supply arrangements in combination with two-tier pricing
  7. prohibit processors withholding loyalty payments if a farmer switches processors
  8. introduce a dispute resolution process for matters related to contracts between farmers and processors, and
  9. alleged breaches of the code, to be investigated by the Australian Competition and Consumer Commission, which may include penalties for breaches of the code.

Next steps

Work will commence to draft regulations for a code of conduct, in the form of an exposure draft.

We will then begin a third round of consultation across the dairy industry to gather your feedback on the drafted regulation.

How you shared your ideas

We sought your feedback on draft clauses for a dairy code and potential regulatory impacts of a code over two consultation rounds. The first round of consultation opened on 31 October 2018 and closed on 28 November 2018. The second round of consultation opened on 15 January 2019 and closed on 15 February 2019.

We gathered your ideas through:

  • 18 public consultation meetings held in all dairy regions
  • one-on-one meetings with over 20 processors and industry representative bodies
  • two tele-town hall sessions
  • phone calls and emails from dairy farmers and other industry members.
  • First round of consultation

    5 months ago
    Date Location Region
    8 November 2018 Devonport, TAS DairyTas
    13 November 2018 Mt Gambier, SA DairySA
    14 November 2018 Adelaide Hills, SA DairySA
    15 November 2018 Brunswick, WA Western Dairy
    15 November 2018 Margaret River, WA Western Dairy
    19 November 2018 Bega, NSW DairyNSW
    20 November 2018 Nowra, NSW DairyNSW
    20 November 2018 Lismore, NSW Subtropical
    21 November 2018 Wauchope, NSW DairyNSW
    21 November 2018 Gympie, QLD Subtropical
    22 November 2018 Boonah, QLD Subtropical
    26 November 2018 Camperdown, VIC WestVic Dairy
    26 November 2018 Malanda, QLD Subtropical
    27 November 2018 Shepparton, VIC Murray Dairy
    28 November 2018 Maffra, VIC GippsDairy
    Date Location Region
    8 November 2018 Devonport, TAS DairyTas
    13 November 2018 Mt Gambier, SA DairySA
    14 November 2018 Adelaide Hills, SA DairySA
    15 November 2018 Brunswick, WA Western Dairy
    15 November 2018 Margaret River, WA Western Dairy
    19 November 2018 Bega, NSW DairyNSW
    20 November 2018 Nowra, NSW DairyNSW
    20 November 2018 Lismore, NSW Subtropical
    21 November 2018 Wauchope, NSW DairyNSW
    21 November 2018 Gympie, QLD Subtropical
    22 November 2018 Boonah, QLD Subtropical
    26 November 2018 Camperdown, VIC WestVic Dairy
    26 November 2018 Malanda, QLD Subtropical
    27 November 2018 Shepparton, VIC Murray Dairy
    28 November 2018 Maffra, VIC GippsDairy
  • Second round of consultation

    about 1 month ago
    Date Location Region
    29 January 2019 Warragul, VIC GippsDairy
    31 January 2019 Echuca, VIC Murray Dairy
    1 February 2019 Warrnambool, VIC WestVic Dairy
    6 February 2019 Tele-town hall
    7 February 2019 Tele-town hall
    Date Location Region
    29 January 2019 Warragul, VIC GippsDairy
    31 January 2019 Echuca, VIC Murray Dairy
    1 February 2019 Warrnambool, VIC WestVic Dairy
    6 February 2019 Tele-town hall
    7 February 2019 Tele-town hall