Murray Goulburn intends to work with all members of the supply chain to improve milk-price transparency.
The processing giant said a commodity milk price index might be the best way to ensure pricing transparency in a submission made to the senate inquiry into the dairy industry.
The Senate Economics References Committee – launched by senators Nick Xenophon and Jacqui Lambie in September – was told by MG a “tailored commodity milk price index would be beneficial to all participants in the Australian dairy industry”.
In MG’s submission, interim chief executive David Mallinson said it supported transparency, adding the Code of Conduct announced last week was one way to achieve this.
He said MG had “by far” the largest exposure to international commodities of all Australian processors.
“With the amount of volatility we have seen in export commodity markets, we need to have a different policy mechanism to absorb (this),” Mr Mallinson said.
During the election campaign Federal Agriculture Minister Barnaby Joyce promised to establish an index, committing $2 million towards the initiative.
The inquiry is one of four investigations initiated since the dairy crisis began in April and aims to question the legality behind the retrospective price cuts of Murray Goulburn and Fonterra.
MG’s submission follows others made by south-west lobby group Farmer Power, the National Union of Workers and Australian Dairy Farmers.
Acting Australian Dairy Farmers president David Basham said it wanted to find a way to “stop things like (the dairy crisis) from happening again”.
“In our submission we said we were working with companies in relation to terms in the contracts and setting up a code of conduct,” he said. “With new (small business) legislation coming into force on November 12, (the code will be) necessary to stop individuals needing to take companies to court.”
Mr Basham said he looked forward to hearing the results to “find out what went wrong”.
“The senate inquiry will pick up loose ends not picked up by regulators (ACCC and ASIC),” he said.
Evidence will be heard in Canberra next week as part of the senate inquiry and written submissions will close November 7.