Dairy Industry Code

The Dairy Industry Code (the Dairy Code) is a mandatory industry code under section 51AE of the Competition and Consumer Act 2010 (CCA). The Dairy Code came into effect on 1 January 2020.

The Dairy Code provides a fairer process for negotiating contractual arrangements between dairy farmers and dairy processors. It improves the balance in bargaining power between dairy farmers and processors. The Dairy Code also includes dispute resolution and mediation processes.

The Dairy Code is a result of extensive stakeholder consultation with dairy farmers and processors.

Information to help dairy farmers and processors understand the Dairy Code and implement its requirements is available on the Australian Competition and Consumer Commission website.

The Australian Government, through the ACCC, regulates the dairy supply chain through a combination of the Dairy Code and the Food and Grocery Code of Conduct which covers the relationship between dairy processors and retailers.

First Review of the Dairy Industry Code

A first review of the Dairy Code was completed in 2021. The first review was conducted by the department with the support of the Dairy Industry Code Review Reference Group. The Group represented the eight dairy regions and included key processor representatives.

The first review found the Dairy Code is providing a crucial framework for the dairy industry and is operating as intended. Whilst stakeholders were highly supportive of the Dairy Code, areas for improvement were identified. The report made three recommendations to improve the operation of the Dairy Code.

The Australian Government response to the first review of the Dairy Code is available below.

Second Review of the Dairy Industry Code

The department commenced the second review of the Dairy Code in October 2024. The review is assessing the role, impact and operation of the Dairy Code on the dairy industry. It is also considering industry feedback from the Dairy Code's 2024 Have Your Say process.

To assist with this review, the department iss establishing a Consultation Group. The Consultation Group:

• includes processor and farmer representatives from across the dairying regions; and
• Employee representatives will also be included as well as observers from ACCC and the Treasury
• provides advice and evidence to the department to inform the review.

The Consultation Group is not a decision-making group.

The review will be undertaken in two stages.

• Stage One will focus on the price setting mechanism under the Dairy Code.
• Stage Two will consider other areas of the Dairy Code. Stage Two will also assess the Dairy Code's sunsetting arrangements.

The department aims to provide the final report to the Minister in mid-2025.

For more information about the second review, please email dairycode.review@aff.gov.au

Download the first review report for the Dairy Industry Code and the Australian Government response

Department of Agriculture, Fisheries and Forestry, March 2022

Amendment Regulations 2023

In response to Recommendation 1(a) and 1(c) of the Report of the first review of the Code, the Amendment Regulations:

• revised the definition of minimum price under the Code, to clarify that deductions related to milk quality will not contravene the minimum price requirements;
• conferred the roles of mediation and arbitration adviser under the Code on the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).

The Amendment Regulations also amended subsection 6(9) of the Code Regulations to extend the timeframe for a report to be provided to the Treasurer. This report will follow the second review of the Code (the Second Review Report). This is a three year extension, from ‘on or before 31 December 2023’, to ‘on or before 31 December 2026’. This enables the Department of Agriculture, Fisheries and Forestry to better evaluate the reforms from the First Review and provide more targeted focal points for the Second Review. This evaluation will be based on the practical experience of industry participants.

Recommendation 1(b) of the Report on the first review of the Dairy Industry Code recommended that the Code to be amended to allow, where agreed by both parties to a Milk Supply Agreement (MSA), an exemption from the minimum price requirements for a specified quantity of milk to enable participation in alternative milk pricing markets. This recommendation was premised on an industry led suggestion. The intent of this was to develop a financial hedging market that settles milk pricing against a bi-monthly physical milk auction.

This recommendation was not pursued in the Amendment Regulations, as there is no milk trading market in Australia. There is also no empirical basis to develop a workable legislative provision to support flexible pricing for milk. There were also stakeholder concerns with a flexible pricing exemption from minimum price obligations under the Code. Given these factors, industry stakeholders agreed that this recommendation should not be implemented at this time. The department will continue to investigate the viability of this recommendation. It may be considered again in the second Code review.

Appointment of Mediation and Arbitration Adviser for the Dairy Industry Code

Under the Code, a milk supply agreement must provide for both an internal complaint handling procedure and a mediation process. The Code also provides both processors and farmers with a right to seek to resolve a dispute via mediation using the process set out in the Code.

Following the implementation of the Competition and Consumer (Industry Codes-Dairy) Amendment (2023 Measures No.1) Regulations 2023 (Amendment Regulations), the roles of mediation and arbitration adviser under the Code have been conferred onto the Australian Small Business and Family Enterprise Ombudsman (ASBFEO). The ASBFEO is the point of contact for resolution of disputes under the Code. Visit the ASBFEO website, email info@asbfeo.gov.au or call 1300 650 460.

Compliance and dispute resolution

For concerns related to compliance with the Code:

The Australian Competition and Consumer Commission (ACCC) is responsible for enforcement of the Code and investigates alleged breaches. For more information about the Code please visit the ACCC website.

If you have concerns about a potential breach of the Code or want to make contact with the ACCC, email dairy@accc.gov.au or call 1300 302 021.

For concerns related to the performance of your agreement:

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) can provide information on options to resolve disputes with access to mediation and/or arbitration services. For more information about the services the ASBFEO provides to dairy businesses visit the ASBFEO website.

If you would like advice on dispute resolution processes or an issue with the performance of your agreement, email info@asbfeo.gov.au or call 1300 650 460.