The mandatory Dairy Code of Conduct will come under review for the first time since its January 2020 inception. NSW Farmers fought hard not only for the code to be made mandatory, but for its design to meet the purpose of regulating power discrepancies between dairy farmers and processors.
While the Code has had some success and widely accepted by farmers and processors, work is still needed to achieve a fairer operating environment for dairy farmers. Transparency and certainty in pricing are two areas in which the Code can deliver change for farmers, but is currently falling short.
The Code introduced a requirement that processors publish their minimum price online by 1 June each year, yet this price is not reflective of what processors intend to pay. While providing some transparency, this aspect of the Code is not meeting its purpose of fostering genuine comparison of milk supply agreements.
A long-term problem for dairy farmers is a lack of certainty around milk pricing. There is a reluctance to pay a higher premium for milk products when prevailing seasonal conditions such as drought drive up the cost of production. NSW Farmers supports the Code being amended to reflect the need for higher milk prices when the cost of inputs, such as feed and water, rises exponentially.
A key intention of the Code was to encourage non-exclusive contracts, allowing farmers to deliver to multiple processors or develop their own products. This outcome has not been achieved, with many processors offering exclusive contracts and farmers facing a significant price penalty for entering into a non-exclusive supply contract.
NSW Farmers will be utilising the upcoming review to highlight these issues, as well as ongoing concerns around the clarity of milk supply agreements. The Code has significant potential in managing power inequities between farmers and processors. The next step is broader competition reform to bridle the disproportionate power of major retailers.
- Colin Thompson, NSW Farmers Dairy committee chair
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