A dairy lobby leader says processors are pushing for “a return to the bad old days” of the 2016 clawback.
A processor proposal to alter the mandatory dairy code of conduct is being described by farmers as “letting the fox run the hen house.”
The Australian Dairy Products Federation has called for a new Benchmark Milk Value to be established as part of a review of the federal government’s mandatory dairy code of conduct.
If the proposed BMV fell significantly lower than the minimum price in milk supply agreements, it would trigger a decision from an independent arbiter about reducing the price.
The BMV would also be used to allow processors to change the minimum price in second and subsequent years in multi-year contracts.
The ADPF proposal was one of a dozen submissions registered with the federal review, alongside submissions from farm lobby groups and the Australian Competition and Consumer Commission.
Australian Dairy Farmers president Ben Bennett said the code was established to deal with the poor behaviour of processors and that they “wanted a return to the bad old days.”
“The mandatory code has kept them accountable. If anything, it needs to be strengthened to further protect farmers,” Mr Bennett said.
“The ADPF proposal is a classic case of letting the fox run the hen house. Just remember — the code was established because of the clawback (by Murray Goulburn/Fonterra in 2016).”
Gippsland farmer Bernhard Lubitz said the processors wanted to roll back the balance that the code had provided since July 2020.
“The ADPF want to legitimatize their use of their milk price portal as the central reference point for milk pricing — this should not be allowed to happen,” he said.
“We need maintain independent role and position of the ACCC and then also bring in DA with an expanded role to give us the information regarding milk price dynamics.”
ADPF chief executive Janine Waller said Australia currently has no objective ‘reference’ or milk price indicator that could be used by both dairy farmers and processors.
“The Benchmark Milk Value aims to provide a credible, trusted benchmark or reference on the wholesale market value of milk and the market influences, at a point in time (spot), for a full season, as well as projected values,” Ms Waller said.
“Credibility and validation would be achieved through having an independent third party to build, monitor and administer the BMV, and conduct an ongoing review process.
“The BMV can build on the ambitions of the Australian Government and Australian Dairy Farmers sponsored Australian Milk Price Initiative (AMPI), which was launched in March 2022 but ceased operation shortly after.”
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