Fonterra, Parmalat, Lion, Brownes, and Norco have all agreed to amend their milk supply agreements after The Australian Competition and Consumer Commission (ACCC) found them to be unfair.
The ACCC said it has been working with dairy processors to ensure that terms in the contracts they offer farmers comply with the law.
The ACCC said it had raised concerns with some processors about lengthy notice periods for farmers to terminate their contracts, one-sided termination rights, broad indemnities, and terms that restrict a farmer’s ability to lease a farm or sell their cattle.
Most processors had now agreed to provide dairy farmers with the right to terminate their contract if the processor varies supply terms, such as price or quality requirements, placing the farmer in a worse position, the regulator said.
“Assessing unfair contract terms in the dairy industry is complex and requires careful consideration," ACCC Deputy Chair Mick Keogh said. "Our work focused on terms in milk supply contracts that have the potential to cause the greatest harm to farmers.
“The ACCC worked with each processor individually to ensure amendments did not disadvantage farmers.
“Where we raised concerns, most processors worked with us to find a solution to better balance farmers’ rights under the contracts,” Keogh said.
The ACCC embarked on an indepth inquiry into Australia's dairy industry in 2016 to investigate sharing of risk along the supply chain, supply agreements and contracts, competition, bargaining and trading practices in the industry and the effect of world and retail prices on profitability.
