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ACCC welcomes mandatory dairy code

  • Posted on Monday 16th, December 2019.

The Australian Competition & Consumer Commission has welcomed the announcement of the introduction of a mandatory dairy industry code by the Minister for Agriculture, Bridget McKenzie.

A mandatory dairy code of conduct was a key recommendation of the ACCC’s 2018 dairy inquiry, which found significant imbalances in bargaining power at each level of the dairy supply chain.

“Our dairy inquiry identified that imbalances in bargaining power between processors and farmers has allowed processors to transfer much of their risk onto farmers,” said ACCC Deputy Chair, Mick Keogh.

"We also identified a lack of transparency in contract and pricing practices, limiting the ability of farmers to compare offers from different processors and hence reducing competition.

“We concluded that a mandatory code was the best way to address these systemic industry problems, so we are pleased to see that this has become reality.

“We look forward to working with dairy farmers and processors as the new code is implemented," he said. "We will also be working closely with the members of our new Dairy Consultative Committee, to help ensure a smooth implementation.”

The ACCC will be responsible for enforcing the mandatory code, to come into effect from 1 January 2020. A review of the code’s role, impact and operation will take place after 12 months.

In other news, Chinese manufacturing company, Mengniu Dairy, entered an agreement to acquire Lion Dairy & Drinks for $600 million.

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