Dairy lobby group says ‘power imbalance’ must shift

Australian dairy farmer lobby group Dairy Connect has called on the implementation of Australian Competition and Consumer Commission reform recommendations, following a recent inquiry into the sector.

Dairy Connect CEO Shaughn Morgan said the nation’s dairy farmers “continue to remain exposed to unfair milk supply agreements put forward by processors”.

The report states farmers are very concerned with the lack of transparency with contract and pricing practices, and the impact of $1 per litre private label milk on the industry.

They have borne the brunt of a commercial system that some may consider not that far removed from the tenant farming relationships of past centuries.

Dairy Connect CEO Shaughn Morgan

The inquiry found a “significant bargaining power imbalance between farmers and processors”, and farmgate prices do not reflect actual prices received by many farmers.

Mr Morgan said the government should “fast track” putting in place the key recommendations of the extensive review.

“The federal government must support its own statutory agency and immediately implement the recommendations of the ACCC,” he said.

“We need a sustainable dairy industry for the long-term.”

PUSHING: Dairy Connect CEO Shaughn Morgan said the nation’s dairy farmers “continue to remain exposed to unfair milk supply agreements".

PUSHING: Dairy Connect CEO Shaughn Morgan said the nation’s dairy farmers “continue to remain exposed to unfair milk supply agreements".

He said Dairy Connect will continue to lobby to ensure all the recommendations are “supported and implemented”.

One recommendation is for a mandatory code to govern dairy supply chain relationships and commercial practices.

“Under the ACCC’s proposal, a mandatory code would not regulate farmgate milk prices or restrict the types of contracting options that a processor can offer,” the ACCC report, released in April, states.

“If the government accepts the ACCC’s recommendation, the content of a mandatory code would be set by the government, who would undertake its own consultation process.”

Mr Morgan said the commercial power imbalances in the industry must be dealt with as soon as possible. 

“Effectively the review pointed to the fact the dairy producers languished at the bottom of a power relationship structure,” Mr Morgan said.

“This will be sweet music to the ears of dairy farming families around Australia today because they have borne the brunt of a commercial system that some may consider not that far removed from the tenant farming relationships of past centuries.

“The power imbalance was evident in the nature of contracts between the processors and farmers,” Mr Morgan said.

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