Mandatory dairy code of conduct

On 15 March 2019, the Liberal and Nationals Government announced that it will progress a mandatory dairy code of conduct.

We are now seeking your feedback on:

  1. the exposure draft of the mandatory dairy code of conduct; and
  2. milk pricing and trading concepts

You may wish to provide feedback on one or both topics.

Share your feedback on the exposure draft

To have your say:

Please provide your feedback by 2.00pm AEDT on 22 November 2019.

Principles of the 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.

Milk pricing and trading concepts

A range of alternative approaches to how farmers sell their milk have been developed and proposed for use within the dairy industry. The government is interested to hear the industry’s views and whether there is a preference for a particular approach.

The Government has committed $560,000 to the Australian Dairy Farmers (ADF), the representative industry group for dairy farmers in Australia, to design, develop and market test new milk pricing and trading concepts. We will provide the initial thoughts raised during this consultation to ADF to inform this work.

While there are different approaches to how alternative milk pricing and trading concepts could work, all are aimed at supporting farmers to have a greater role in managing the sale of their milk. Some of the proposed approaches are based on those used in other commodities such as the wool and grain industries, which have changed how milk is sold and traded among farmers and processors. Others are based on approaches used in the dairy industries of other countries. These approaches include the mandatory collection and publication of the price and volume of milk that has been paid to farmers by processors in the previous month, or exchange platforms to connect farmers with processors.

The dairy industry is encouraged to provide feedback on alternative approaches, including particular factors that are more valued.

Share your feedback on milk pricing and trading concepts

To have your say:

Please provide your feedback by 2.00pm AEDT on 22 November 2019.

Previous consultations

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 Liberal and Nationals Government announced that it will progress a mandatory dairy code of conduct.

We are now seeking your feedback on:

  1. the exposure draft of the mandatory dairy code of conduct; and
  2. milk pricing and trading concepts

You may wish to provide feedback on one or both topics.

Share your feedback on the exposure draft

To have your say:

Please provide your feedback by 2.00pm AEDT on 22 November 2019.

Principles of the 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.

Milk pricing and trading concepts

A range of alternative approaches to how farmers sell their milk have been developed and proposed for use within the dairy industry. The government is interested to hear the industry’s views and whether there is a preference for a particular approach.

The Government has committed $560,000 to the Australian Dairy Farmers (ADF), the representative industry group for dairy farmers in Australia, to design, develop and market test new milk pricing and trading concepts. We will provide the initial thoughts raised during this consultation to ADF to inform this work.

While there are different approaches to how alternative milk pricing and trading concepts could work, all are aimed at supporting farmers to have a greater role in managing the sale of their milk. Some of the proposed approaches are based on those used in other commodities such as the wool and grain industries, which have changed how milk is sold and traded among farmers and processors. Others are based on approaches used in the dairy industries of other countries. These approaches include the mandatory collection and publication of the price and volume of milk that has been paid to farmers by processors in the previous month, or exchange platforms to connect farmers with processors.

The dairy industry is encouraged to provide feedback on alternative approaches, including particular factors that are more valued.

Share your feedback on milk pricing and trading concepts

To have your say:

Please provide your feedback by 2.00pm AEDT on 22 November 2019.

Previous consultations

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.