SADA welcomes dairy code draft

In a 2018 report, the Australian Competition & Consumer Commission was highly critical of the imbalance in market power between dairyfarmers and the processors who purchased their milk.

The outcome of that report was a determination by the Commonwealth to introduce a Mandatory Code of Conduct in Australia.

A draft of that code has now been circulated.

SADA believes the government has listened to the concerns of dairyfarmers and reflected those concerns in this draft, but has one critical comment regarding penalties.

"Under the proposed code all penalties are 300 penalty units - equivalent to $63,000 today," president John Hunt said.

"Bearing in mind that the code does not apply to small business entities, (businesses with a turnover of less than $10 million annually), then the fine imposable on a larger business such as a multi-national corporation would represent a mere inconvenience.

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"However, a similar fine imposed on a farmer could be terminal to the farmer's business.

"As the proposed Mandatory Code of Conduct was born from the disparity between parties, to place the parties on a parity when it comes to penalties is inconsistent with the findings of the ACCC report.

"However, were fines to be imposed, SADA would expect that the tribunal considering the penalty would take such a disparity into consideration."

Mr Hunt hoped the code would see some milk processors change their modus operandi when it came to contractual relationships with farmers and the provisions demanding good faith will be relied upon by farmers.

"This code will demand that the contractual relationship will be one of mutual respect and will reflect a deference to civilized conduct between processors and farmers," he said.

"Consequently, the contract will become a reliable document rather than a bludgeon."