The code will aim to address the imbalance in bargaining power between farmers and milk processors.
The government has kicked off formal consultations on a mandatory code to help deliver reform for the dairy industry, with Minister for Agriculture David Littleproud marking the start of formal consultations while visiting dairy farmers at Shepparton in northern Victoria.
A mandatory dairy code was a key recommendation of the Australian Competition and Consumer Commission’s dairy inquiry last year.
While a mandatory code is being developed, the voluntary code will remain in place, with outcomes of the voluntary levy review to be considered when developing the mandatory code.
“The dairy industry came to me with a united position – that it wanted a mandatory code of conduct,” said Mr Littleproud who was in the Goulburn Valley this week with the Member for Murray, Damian Drum.
“I’ll deliver it.
“Consultations will occur across dairy regions and I want all dairy farmers, processors and people interested about the future of dairying in this country to get involved.
“The code will help make negotiations and contract arrangements between farmers and processors fairer and more transparent and include a dispute resolution process.
“However this alone will not fix the dairy industry or increase farm gate prices — real structural reform is needed.”
Mr Drum said this was an important step in supporting local dairy farmers.
“Milk is the most valuable agricultural commodity in the Shepparton region – worth $464 million in 2016–17,” he said.
“Dairy is Australia’s third largest rural industry, worth almost $3.7 billion in 2016–17.
“Our farmers have been hit by retrospective price cuts and now drought.
“A mandatory code will help deliver transparency and support stability in the industry long term.”
He said dates and locations for regional consultation with dairy farmers would be released shortly.