THE three major south-west dairy processors have signed a voluntary Dairy Industry Code of Practice that calls on them to no longer impose the clawbacks of milk payments that sparked an outcry last year.
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Murray Goulburn, Fonterra and Warrnambool Cheese and Butter were among those to sign the code with Bega, Lion, Burra Foods, Australian Consolidated Milk and Freedom Foods the other signatories.
The new code is a collaboration between the United Dairyfarmers of Victoria (UDV), the peak national dairy farmer advocacy group, Australian Dairy Farmers (ADF) and state dairy farming organisations.
The UDV said the new code would create “balance and transparency along the industry supply chain, with farmers to gain more control during contract negotiations with processors.”
The code ensured provisions to ensure pricing mechanisms such as price variations and loyalty payments were managed openly and fairly, the UDV said.
UDV president Adam Jenkins said “it’s important that contracts are fair, simple, realistic and easily understood by both farmers and their processor.”
“For too long there has been a ‘take it or leave it’ mentality when it comes to negotiating supply agreements, and the code aims to fix this attitude as part of our plan to rebuild trust and confidence within the dairy industry,” Mr Jenkins said.
“It’s an achievement of the dairy industry that in tough times we’ve been able to work together to come up with real solutions to improve industry practice,” he said.
The ADF said the code was a major achievement.
It said the code addressed issues under the Unfair Contract Terms law for Small Business. The code also built upon unfair contracts legislation by setting out good practice for contracts between farmers and processors, the ADF said.
It expected most of the milk produced in Australia would be covered by the code.