When negotiating milk supply contracts, farmers should be afforded the unfair contract term-protections, now enjoyed by other small businesses.
The National Farmers’ Federation (NFF) has welcomed what it dubs ‘sensible’ and ‘fair’, recommendations made in a Senate Committee report looking at the future of Australia’s dairy industry.
“It’s certainly a good start,” NFF Chief Executive Tony Mahar said.
“On face value the recommendations give some direction towards the certainty, transparency and fairness dairy farmers need.”
The Senate Economic Committee began its work in September last year in response to the ‘dairy crisis’ which saw some farmers forced out of business and many taking on high levels of debt to remain in operation.
The Committee has made recommendations on the nature of contracts between farmers, processors and retailers and the behaviour of dairy farmer cooperative Murray Goulburn.
Mr Mahar said a recommendation for the Australian Competition and Consumer Commission (ACCC) to consider making milk supply contracts subject to unfair contract legislation was sound.
“The majority of dairy farmers are largely family operations who can be at a distinct disadvantage when negotiating with the might and force of large processors.
“When negotiating milk supply contracts, farmers should be afforded the unfair contract term-protections, now enjoyed by other small businesses.”
Mr Mahar also welcomed an independent review of the voluntary Code of Conduct with the view of better addressing the power imbalances between farmers and processors.
Specifically, the report recommends farmers and processors have shared responsibility of avoiding the impact of ‘bargain’ supermarket milk prices.
“The committee suggests dairy processors set opening prices conservatively so that any downward pressure from market forces will not result in retrospective price step-downs that have devastating impacts on dairy farmers.
“The report suggests farmer representative bodies work with retailers to better educate consumers about the dairy industry so shoppers can make more informed choices when purchasing products.”
Mr Mahar said a recommendation that the ACCC consider how farmers could increase their ‘collective bargaining’ power when determining supply contracts was bona fide positive.
“Collective bargaining does work well in New Zealand. However, it will only operate effectively here if there is genuine commitment to equity by farmers and processors.”
The NFF will be working with its member organisation, the peak body for the Australian dairy industry, Australian Dairy Farmers, to determine the wider impact of the recommendations – if implemented.