A British code of conduct model could be the basis for much more productive Australian dairy industry.
The NSW-based Dairy Connect wants a model code, similar to what now exists in the horticulture and grocery sectors, to be discussed at this week’s industry-wide symposium in Melbourne, hosted by Deputy Prime Minister Barnaby Joyce.
Dairy Connect says Australia would do well to consider key sections of UK voluntary code of conduct governing equitable relationships between milk producers and processors.
“The UK recognised the main driver for the downturn milk prices was volatility in global markets and there should be greater promotion of dairy produce,” said chief executive officer, Shaughn Morgan.
He said a key component of the UK code was giving farmers more access to pricing certainty, including the option to sell surplus milk to another processor, outside their contract, if a better price was offered.
Given the Australian Competition and Consumer Commission (ACCC) considered the dairy a strong candidate for its next major agriculture review, likely to start in November, Mr Morgan believed the UK’s lessons could be timely and helpful to Australian dairy farmers.
“The question of potentially unconscionable dairy contracts will be a front and centre issue at the Melbourne forum,” he said.
The UK code emerged after a landmark report into milk pricing by a House of Commons’ food and rural affairs committee in 2014.
He said while not entirely relevant to Australia, elements from the UK code could invaluably guide protocols and ethical practices for our dairy supply chain.
“In particular, the UK industry supported the government exploring practical steps to bolster exports, including initiatives such as the simplifying export documentation and funding of foreign inspection visits,” Mr Morgan said.
“The report also found longer-term country of origin labelling would benefit the industry and consumers.”
Thursday’s national symposium comes in the wake of a crash in farmgate milk prices after three years of depressed global markets.
The emergency meeting will be attended by representatives Dairy Australia, supermarket chains, large and small processors, state and national dairy farmer group delegates and ACCC agriculture commissioner, Mick Keogh.
Discussion topics will include Australia’s dairy market and production outlook, options for improving milk price transparency, strengthening bargaining and restoring industry confidence.
Mr Joyce said the symposium was an opportunity for industry-led discussion to “better manage risk along the dairy supply chain, including managing the effects of world dairy prices”.
Australian Dairy Farmers acting president, David Basham, wants the event to be a starting point for the whole chain to start sharing the industry’s risks.
“Farmers are carrying the majority of the risk at the moment,” he said.
He believed more information should be available to farmers to better understand global markets and put processor recommendations into context.
Mr Morgan, who is also attending, agreed, saying there was an extended role for the ACCC to be more actively supervising relationships, particularly those between producers and processors.
Beyond any class legal action by farmers in the wake of recent price cut shocks, he said the dairy symposium needed to address future contract protocols to ensure supply agreements comply in full with Australian consumer law guidelines on unconscionable conduct.
“Issues such as exclusivity of supply and price-volume concerns need to be considered while all parties are sitting around the same table.”