Farmer activist group Farmer Power says a mandatory code of conduct rather than a voluntary one is needed to overcome late payments to small businesses such as dairy farms.
Farmer Power vice president Alex Robertson of Simpson said the United Dairyfarmers of Victoria’s (UDV) call for a voluntary code of conduct on issues such as payment times to small businesses would not be sufficient to address the problem of late payments faced by many dairy farmers.
Mr Robertson said dairy farmers could relate to the recent report on payment times by the Small Business and Family Enterprise Ombudsman (SBFEO) that found there was a notable trend for longer payment times in Australia.
The SBFEO found longer payment times “slows down the flow of cash through the supply chains” and voluntary codes of conduct would not be sufficient to address the problem.
The SBFEO found that “while voluntary codes and other soft measures provide an option for businesses to signal their good intentions, it is only the power of legislation which will compel businesses to meet payment standards and address late and extended payment times.”
Mr Robertson said he questioned why the UDV and Australian Dairy Farmers were promoting a voluntary code of conduct when a mandatory code was required to protect dairy farmers.
He said statements that “a mandatory code doesn’t mean it’s mandatory to sign up” only confused the issue.
“If a mandatory code is legislated, then it will apply to all processors,” Mr Robertson said.
A “legally binding voluntary code” would rely on contract law for enforcement and would be no different from the current situation, he said.