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Source: Australian Competition and Consumer Commission

The ACCC has today published a Dairy Code: initial observations on compliance update that outlines the ACCC’s views on dairy processors’ compliance with the Dairy Code of Conduct, one year after it came into effect, and six months since dairy processors were required to publish their standard form milk supply agreements.

Areas of concern identified in the update include processors’ compliance with the publishing obligations, as well as the code’s single document, termination and supply period requirements.

“The ACCC has been engaging with the dairy industry over the past year to help farmers and processors better understand their obligations and rights under this new mandatory code,” ACCC Deputy Chair Mick Keogh said.

“In the short time that the code has been in effect we’ve seen it bring some positive changes to the industry, but we’ve also identified areas where processors need to improve their compliance.”

“We invite processors to review their milk supply agreements in light of this update and seek legal advice if needed. We also encourage farmers and other dairy industry participants to re-familiarise themselves with their code rights and obligations,” Mr Keogh said.

One of the code’s core obligations is that processors publish milk supply agreements by 2pm on 1 June each year. To date, the ACCC has announced two enforcement outcomes relating to failures to publish by the deadline, and investigations into others continue.

“Dairy processors must ensure they meet their publishing obligations under the code and our enforcement action to date shows that we take non-compliance with these obligations seriously. Processors and farmers must also be certain that the agreements themselves, including the terms, comply with the code’s various requirements,” Mr Keogh said.

From 1 January 2021, all milk supply agreements, regardless of when they were entered into, must be compliant with the code.

Background

The Dairy Industry Code of Conduct is an industry code regulating the conduct of farmers and milk processors in their dealings with one another. It came into effect on 1 January 2020. A mandatory dairy code of conduct was a key recommendation of the ACCC’s 2018 dairy inquiry.

The Federal Government will lead a review of the code in 2021 that assesses its role, impact and operation. The review will include consultation with a range of dairy industry stakeholders, including farmers, and the ACCC as the agency that enforces the code.

The ACCC recently conducted an inquiry into bargaining power in supply chains for perishable agricultural products in Australia. Among other things, the inquiry examined issues in the dairy industry.

The report is available at Perishable Agricultural Goods Inquiry Report.

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