The Dairy Industry Code of Conduct (‘the Code’) came into effect on the 1st of January 2020. It is a mandatory industry code prescribed under the Competition and Consumer Act 2010, intended to create greater transparency and certainty in the dairy industry. The Code follows findings from the 2018 ACCC Dairy Inquiry which revealed that the industry practices heavily favoured processors. Farmers are expected to benefit from the various rules imposed by the Code, which is a product of extensive stakeholder consultation. For example, there is a good faith requirement and processors are only permitted to purchase milk under a supply agreement, which must include certain elements like minimum pricing and justification. In addition, the Code bans retrospective step downs (i.e. reducing the minimum price post delivery) and limits the availability of a prospective step down. The Code also introduces a new, comprehensive dispute resolution process. Overall, the Code creates a fairer contract negotiation process and rectifies the imbalance in bargaining power between farmers and processors. Contact M+E for further information about the details and operation of the Dairy Industry Code of Conduct.
