Codes and Competition on Agenda

EastAUSmilk has in the last week held multiple meetings with Commonwealth public servants and politicians to discuss the Dairy Industry Code, Fruit and Vegetable Code, competition policy, and the needs of the dairy industry.

In Canberra and in Brisbane, Chief Executive Officer Eric Danzi and Government Relations Manager Mike Smith met with senior officials from Treasury and from the Department of Agriculture, Fisheries and Forestry, as well as the Assistant Minister for Competition Charities and Treasury, Dr Andrew Leigh.

While eastAUSmilk has made substantial submissions to several of the inquiries currently underway into the behaviour of major supermarkets, we needed to understand where the multiple reviews of supermarkets are going, and what the next steps are likely to be. Also discussed were both the recent eastAUSmilk submission on the review of the Dairy Industry Code, and what comes next for that review.

Everyone we spoke with was very keen for information about how the market really operates, rather than dry economic theory, and we were able to provide many examples of anti-competitive behaviour and bullying, along the supply chain.

We also invested time, in some of our meetings, in explaining why farmers are demanding change in the priorities of Dairy Australia, and discussing some pressing research and extension needs which are not being addressed.

In light of these discussions, eastAUSmilk has responded to the recent Interim Report of the Review of the Food and Grocery Code, by calling for more detail on how big supermarkets must change to eliminate bullying and retaliatory behaviour towards suppliers, reshaped our call for supply chain margins to be monitored, and tackled the need for the uncompetitive outcomes of national pricing and preferential pricing for private label products to be addressed.

Department of Agriculture, Fisheries and Forestry told us that once they have fully digested the submissions made in response to their recent Dairy Industry Code discussion paper, they will be making recommendations to Government about the scope of the full second review of the Code, and how it will be conducted. They have not yet fully examined and evaluated those submissions, but Minister Murray Watt recently committed that the second review will fully commence in September this year.

By Mike Smith, eastAUSmilk Government Relations Manager

Dairy Code Review Moves Slowly Forward

Over objections from eastAUSmilk, the Commonwealth Government deferred the second review of the dairy industry code, so it is now to be completed by late 2026 instead of late 2023.

They’ve started that review with a discussion paper, asking for input to Department of Agriculture, Fisheries and Forestry by last week, on eight previously-identified issues.

EastAUSmilk already had a list of issues to raise, and most of them fitted within the eight listed by DAFF. However, we refuse to be limited by other people’s priorities, in the Dairy Code matters we raise on behalf of members. In the end we advanced 28 separate propositions to do with our list of issues and DAFF's eight.

It’s a bit hard to identify the ultimate origin of each of their eight issues, but some have clearly come from milk processors who want to weaken the Code.

The eastAUSmilk submission called for monitoring of margins through the whole supply chain, better prepared income estimates for farmers and reconciliation of those estimates against actual earnings, long term contracts to have no less than the year one price in subsequent years, minimising milk swaps between processors while they are used to keep prices low, a requirement for bargaining in good faith and full disclosure when settling milk supply agreements, and preserving the cooling off period. And many more!

Overall we were clear that there is still an imbalance between processors and farmers in the market, and that Code needs strengthening rather than weakening.

What happens now? DAFF say they will consider submissions, then consult with industry about the conclusions they reach. Once that’s done, they will collate stakeholder feedback, and make recommendations to the government. The outcomes of this process will guide the rest of the Code review, which will look at the whole the Code, not just these eight topics. The Minister for Agriculture, Fisheries and Forestry Murray Watt has committed to commencing that process by September this year.

By Mike Smith, eastAUSmilk government relations manager

Dairy Code Review – Farmers Urged To Make Submissions

Department of Agriculture, Fisheries and Forestry has announced commencement of preliminary consultation on the coming review of the Dairy Industry Code, and eastAUSmilk is urging dairy farmers to make a submission before the 15 March deadline.

Information about the consultation process can be found here https://haveyoursay.agriculture.gov.au/industry-comments-on-the-operation-of-the-dairy-industry-code.  You can download a discussion paper, and 8 focussed questions, from that web page.

eastAUSmilk has warned farmers this is a narrow consultation, focussing on eight issues of concern raised in the first (2021/22) review of the code by DAFF, and not all of their concerns can be addressed this time around. Those eight issues are reflected in both of the downloadable documents.

While many dairy farmer concerns can be raised in the context of these eight questions, not all can be. eastAUSmilk’s submission will make clear that consideration of a narrow range of issues, based on feedback in 2021, is not a good enough review of the code a further three years down the track.

eastAUSmilk is concerned that, somehow, DAFF came away from the 2021/22 review claiming everything was generally satisfactory with the code, and seem to have been unaware of the many and widespread concerns of eastAUSmilk members. Certainly, since that review, many other concerns have been raised with eastAUSmilk by members.

Included on the list of issues to be raised are the need to make suppliers a secured creditor, control or prohibition of milk swaps by processors which are used to undercut pricing, minimum price for later years needs to be at least the year one price, further barriers to processor collusion, final contract terms rather than initial terms need to be made public.

Individual dairy farmers are urged by eastAUSmilk to have their say via the above feedback page, and also to let eastAUSmilk know what concerns have been raised.  Anyone making an online submission will be emailed a copy of their submission, and that can be forwarded to Mike@eastAUSmilk.org.au.

Mike Smith, eastAUSmilk government relations manager