A primary concern is the proposed acquisition of Fonterra’s Australian assets by Lactalis. While the Australian Competition and Consumer Commission (ACCC) did not oppose the merger, the Australian Dairy Farmers (ADF) organization strongly disagrees with the decision. The ADF warns that in key regions, this deal could leave farmers with only one major buyer, thereby eroding their bargaining power and price competition. This market concentration, according to the article, poses a real risk of compounding processor dominance and negatively impacting farmer livelihoods.

The article emphasizes the vital role of the Dairy Code of Conduct, a regulation implemented in 2020 following the notorious “processor claw-backs.” This code, which sets minimum standards of conduct, has proven its worth through enforcement actions. The article cites a notable example where Lactalis was fined $950,000 for contract clauses that undermined the code’s core objectives. This penalty, the article states, proves the code’s effectiveness and underscores the need for its protections to be rigorously enforced.

With a review of the code underway, the article argues now is the time to strengthen, not weaken, protections for dairy farmers. The author stresses that effective regulation is a matter of trust, ensuring farmers have fair contracts and a secure future. With this certainty, the article contends, will come increased on-farm investment and production. This sentiment is key to understanding the dairy economics of the region, where a lack of trust in the system can stifle growth and innovation.