DAIRY farmers are hoping to avoid a repeat of the milk price crisis of 2016 by striking a new deal with milk processors.
Farmer lobby group United Dairyfarmers of Victoria (UDV) is developing a new code of practice for contractual arrangements between dairy farmers and processors.
UDV representatives were in South Gippsland last week to talk to dairy farmers about the code, which will remove the provision for clawbacks that allowed Murray Goulburn to require farmers to pay back money already paid to them last year, on the back of a substantial drop in price.
UDV president Adam Jenkins said the UDV was working on the contract with national lobby group Australian Dairy Farmers.
“The code makes sure the risk is shared along the supply chain. Up until now, farmers have been bearing the bulk of risk of management decisions,” he said.
“There is a general agreement that the clawback practice has to go. What won’t disappear is the ability for processors to step down prices because that is because of company law to ensure they can’t trade insolvently. Clawbacks are more to do with one offs.”
A draft code is expected to be released for public comment this month.
The UDV held meetings with farmers at Fish Creek Hotel on Wednesday evening, and last Thursday held a morning tea at the Murphy family property at Dumbalk North, a lunch at Leongatha RSL and a dinner at Wonthaggi Workmen’s Club.
Farmers at the Leongatha RSL gathering heard from Yannathan dairy farmer Evan Campbell about his participation in the UDV/Gardiner Foundation New Zealand Study Tour in February this year.
He noted NZ farmers face environmental issues due to shallow topsoil increasing the risk of nutrients entering waterways, a shortage of skilled labour and public criticism due to the high cost of dairy products on the domestic market.
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