VICTORIAN dairy farmers have reached a major breakthrough in their relationship with milk processors, with all industry stakeholders agreeing to put forward a Voluntary Code of Conduct six months after major milk price cuts rocked the industry.
The United Dairy Farmers of Victoria (UDV) called for transparency in all future dairy supply contracts, which would be covered under the Code, at a meeting last week between dairy farmer organisations and milk processors.
“We’ve worked hard since the crisis unfolded in April to get everyone in a room to hash out our issues and put forward a case to ensure future milk supply agreements are balanced, fair and transparent,” UDV President Adam Jenkins said.
“It’s been a long process to pin down the processors and get them to agree to meet with us, but with intervention from the Federal Government, we’ve been able to achieve a major step forward for the dairy industry in ensuring farmers are never again forced to retrospectively repay their earnings due to milk price cuts.
“Now we’ll work together to develop a draft Code of Conduct which will improve transparency and business to business relations before unfair contracts legislation comes into force next month.”
The Code will include:
• Greater transparency in contracts and supply agreements
• Ensuring a pricing formula or mechanism is clearly defined within a contract
• Ensuring pricing adjustments to farmers throughout a contract are clearly defined and that there will be no retrospectivity
• Ensuring suppliers are given adequate notice if step-downs are to occur
• Ensuring that farmers receive all payments accrued over the term of a contract
• Ensuring processor exclusivity does not occur in cases where the processor has a contracted volume limit
• Ensuring a clearly defined mechanism for giving notice of contract termination
• Ensuring a clearly defined mechanism for modifying contract conditions, and giving farmers the right to negotiate variation
Mr Jenkins said the dairy industry planned to finalise the draft Code as soon as possible, ahead of the new legislation and before the Australian Competition and Consumer Commission hands down its report into the dairy industry next year.