In April 2018 the ACCC in it’s Dairy Inquiry report reached a core recommendation that a mandatory code of conduct be implemented to improve contracting practices between dairy processors and farmers. The intent would be to address problems arising from the large imbalance in bargaining power and information that exists between dairy farmers and processors.
Processors currently hold the balance of power in the supply-demand relationship – imposing milk prices and other rigid milk supply contract terms – some contracts even restrict farmers’ ability to change processors for a better offer.
These issues ultimately harm dairy production efficiency and reduce the effectiveness of competition between processors. The ACCC explored ways to address these concerns and found the existing provisions of the Competition and Consumer Act (2010), the dairy industry’s voluntary code of conduct, or a prescribed voluntary code would be inadequate.
The final report can be downloaded here. Whilst a new code of conduct will takes years of regulatory drafting and Parliamentary to-ing and fro-ing, industry stakeholders eager to right the imbalance can take charge right now. Milk2Market’s service offering is singularly focused on addressing this imbalance and providing the fairness and transparency that the Australian dairy industry so desperately needs.