A voluntary code of conduct between dairy farmers and processors is being developed to help reduce the likelihood of another price crash.
The national code of conduct is being developed as a response to the dramatic crash in farm-gate milk prices endured by farmers last year.
Dairy processors Murray Goulburn and Fonterra, who are the main processors in Tasmania, both dramatically reduced the price paid to farmers for their milk in May and June last year.
The price sent many dairy farmers into a downward spiral of debt, when Murray Goulburn announced the price cut-back would be retrospective and be the price paid for the whole season.
Tasmanian Farmers and Graziers Association dairy council chairman Andrew Lester said while there was still a long way to go until farmers felt they were back on top but the voluntary code of conduct did go some way to restoring the relationship between farmers and processors affected by the cuts.
“The code of conduct is being developed after some new legislation was passed,” Mr Lester said.
The fair contract legislation came into effect in November and will help level the playing field for small businesses entering into contracts with large companies such as the dairy processors.
The legislation puts more onus on the large company to ensure no unfair clauses are put into contracts that would negatively impact the small business.
“This legislation gives farmers more surety. It puts more pressure on them to develop fair work contracts.”
Mr Lester said the voluntary code of conduct had been received positively by the processors and said most of them had indicated they wanted to be involved.
Discussions on what the code will entail are still ongoing but Mr Lester said the positive response had significant wait for the dairy community because it was voluntary.
Despite this action, Mr Lester said there was still a long way to go before this issue was rectified.
However it wasn’t all doom and gloom, with previously tough seasonal conditions easing, resulting in plentiful fodder supplies and downward pressure on fertiliser and feed prices.
“There’s plenty of fodder around so that’s positive in terms of a reduction of fixed costs,” Mr Lester said.
The Australian Competitor and Consumer Commission is in the process of two inquiries into the dairy industry as a result of the price crash but a report is yet to be completed.
The Tasmanian Legislative Council has also chaired a separate inquiry into the dairy industry in Tasmania chaired by MLC Greg Hall.