Dairy farmers to get fairer contract terms

Five dairy processors have agreed to amend their milk supply agreements following the Australian Competition and Consumer Commission’s (ACCC) concerns they were unfair to dairy farmers.

Brownes Food Operations, Lion Dairy & Drinks, Norco Co-operative Limited, Parmalat Australia and Fonterra Australia will amend specific terms in their milk supply contracts, as part of the ACCC’s efforts over the past year to ensure they comply with the business-to-business unfair contract terms law enacted by the Australian Government in November 2016.

“Farmers should be getting a fair deal when they contract to supply milk to dairy processors,” ACCC Deputy Chair Mick Keogh said.

“Assessing unfair contract terms in the dairy industry is complex and requires careful consideration. Our work focused on terms in milk supply contracts that have the potential to cause the greatest harm to farmers.”

Most processors have agreed to provide dairy farmers with the right to terminate their contract if the processor varies supply terms such as price or quality requirements. The ACCC also raised concerns with some processors about lengthy notice periods for farmers to terminate their contracts, one-sided termination rights, broad indemnities and terms that restrict a farmer’s ability to lease a farm or sell their cattle.

“The ACCC worked with each processor individually to ensure amendments did not disadvantage farmers,” Keogh said. “Where we raised concerns, most processors worked with us to find a solution to better balance farmers’ rights under the contracts.”

After conducting an inquiry into the competitiveness, trading practices and transparency of the Australian dairy industry, the ACCC’s final report in April 2018 recommended that dairy processors and farmers implement a mandatory code of conduct.

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