The Australian Small Business and Family Enterprise Ombudsman has welcomed the new dairy industry Code of Practice for Contractual Arrangements between farmers and processors.
Ombudsman Kate Carnell had input to the code and said she will monitor its effectiveness over the next 12 months.
Ms Carnell said the voluntary code addresses issues that may be contested under the Unfair Contract Terms law for Small Business, which began operating on November 12 2016.
“I’m very pleased that all the major processors and farmer organisations have signed the code,” Ms Carnell said.
“Many farmers were crippled in 2016 by retrospective price reductions, which are no longer allowed.
“There is now a requirement for notification and transparency, which will help farmers to make informed decisions.”
Ms Carnell welcomed the recognition by processors that downward price movements are undesirable.
The voluntary code requires 30 days’ notice of step-downs, which must be clearly set out in the contract. Farmers are also required to give 30 days’ notice of changing processors, with a cooling-off period of 21 days.
“A farmer is entitled to all accrued loyalty payments if they have supplied to the end of their contract term,” Ms Carnell said.
“This addresses a previous unfair situation.
“The voluntary code is a positive step and I hope it works. A negotiated voluntary agreement is better than seeking to introduce more regulation.
“I will review the effectiveness of the voluntary code to make sure it’s working as intended.”