MIL-OSI Australia: Dairy Farmers Milk Co-operative pays penalty for alleged Dairy Code breach

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Source: Australian Competition and Consumer Commission

The Dairy Farmers Milk Co-operative Limited (DFMC) has paid a penalty of $11,100 after the ACCC issued it with one infringement notice for allegedly failing to comply with its publishing obligations under the Dairy Code.

The Dairy Code requires most companies that buy milk from farmers to publish standard form milk supply agreements on their websites by 2.00pm on 1 June each year. These agreements must cover all the circumstances in which the company intends to purchase milk in the upcoming dairy season, so farmers can compare the minimum prices and contract terms on offer.

The ACCC alleges that DFMC did not publish any of its standard form milk supply agreements for the 2021-22 dairy season on its website by the publication deadline.   

DFMC has since published all of its milk supply agreements on its website.

“The Dairy Code imposes certain obligations on all companies that buy milk from farmers,” ACCC Deputy Chair Mick Keogh said.

“While DFMC doesn’t process milk, it was buying milk from member farmers to supply a processor, and so has the same legal obligations under the Code.”

“Failing to publish milk supply agreements on time makes it more difficult for farmers to access key information about the milk supply terms on offer. We know that many farmers have to make time-critical supply decisions in June each year,” Mr Keogh said.

“The Code was introduced to improve price transparency in the dairy industry, so it is essential that processors and co-ops make their milk supply agreements publicly available by the 2.00pm deadline on 1 June.”

“The Dairy Code remains a priority for the ACCC, and it’s important that milk processors and other milk purchasers understand the requirements of the Dairy Code and actively comply with them,” Mr Keogh said.

“The ACCC is continuing to monitor compliance with the Dairy Code, and any breaches detected may result in enforcement action.”

Background

DFMC is a large farmer co-operative that purchases about 185 million litres of milk per year, which it sources from over 160 dairy farmers located across Victoria, South Australia, New South Wales and Queensland.

The ‘Dairy Code’ is an abbreviation for the Competition and Consumer (Industry Codes – Dairy) Regulations 2019. It came into effect on 1 January 2020. As of 1 January 2021, all milk supply agreements, irrespective of when they were entered into, must comply with the requirements.

The Dairy Code applies to all processors with an annual aggregated turnover of $10 million or more in the previous financial year. Under the Code, a ‘processor’ includes any corporation that purchases, or may purchase, milk from farmers, irrespective of whether the corporation processes that milk.

A processor must, at or before 2.00pm on 1 June each year, publish on its website:

  • one or more standard forms of milk supply agreements; and
  • for each standard form milk supply agreement, a statement setting out the circumstances in which the processor would enter into the agreement in that form.

Processors must publish as many standard forms and statements of circumstances as are necessary to ensure that all the circumstances in which they intend to purchase milk in the coming season are covered.

Note to editors

The ACCC can issue an infringement notice when it has reasonable grounds to believe a person or business has contravened a civil penalty provision of the Dairy Code.

The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Dairy Code.

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