Australian dairy sector to be bound by mandatory code

Australia’s embattled dairy sector will be bound by a mandatory code to improve farmers’ negotiating powers in less than three weeks, ending industry fears its January 1 deadline could be missed.

Federal Agriculture Minister Bridget McKenzie confirmed this morning the long-awaited dairy mandatory code, which will replace the existing voluntary code, would be enforced on January 1.

The announcement came after Senator McKenzie drew criticism last month after saying its implementation could be delayed because she had no plans to rush the regulations to meet “some arbitrary time frame”.

Under the newly-minted mandatory code, dairy farmers will be offered a clear minimum price, a schedule of monthly prices, or a schedule of yearly prices for longer-term agreements by processors.

Farmers will also be granted a cooling-off period of 14 days and a clear start and end date for the milk supply period, unless the processor is a co-operative.

Senator McKenzie said the mandatory code would improve dairy farmers ability to leverage bargaining power in negotiations with milk processors.

However, she conceded it was not a “silver bullet” to solve the industry’s pricing woes.

“Whilst the mandatory dairy code is an important step forward for our dairy farmers in protecting their interests, it will not be a silver bullet for all the difficulties they are facing,” she said.

“Our dairy farmers are under real and sustained pressure because of the drought, high input costs for electricity, fodder and water, and a power imbalance in negotiating a fair farmgate price from processors.”

The mandatory code’s clauses slightly differ from the draft mandatory code unveiled in January this year.

Senator McKenzie said industry consultation, which included meetings with South West dairy farmers in Brunswick, helped create a “stronger, clearer document that delivers the protections it should for dairy farmers”.