Five major dairy processors have agreed to amend supply contracts after concerns from the competition watchdog farmers were being milked dry.
Brownes Food Operations, Lion Dairy and Drinks, Norco Co-operative Limited, Parmalat Australia, and Fonterra Australia will amend terms in supply contracts as part of ongoing co-operation with the Australian Competition and Consumer Commission over business-to-business laws 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.
‘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, placing the farmer in a worse position.
The final ACCC report on the competitiveness, trading practices, and transparency of the Australian dairy industry included a recommendation to improve contracting practices that dairy processors and farmers implement a mandatory code of conduct.
Meanwhile, 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.