The ACCC Dairy Inquiry Interim Report was released on November 30, 2017. Given DFMC’s detailed submission to the enquiry (covering collective bargaining and pricing) and two very productive meetings with the ACCC Agriculture Commissioner Mick Keogh and his team during 2017, the ACCC specifically sought a response from DFMC and offered to meet once more to discuss the issues. Independent Director John Bywater again was central to our response in which we supported a number of the Interim Report recommendations.

John and Executive Officer Mark Kebbell met with the ACCC in February. Specifically we supported the strengthening of the voluntary dairy code to a mandatory code of conduct, the establishment of an independent body to act as a binding arbiter in relation to contract disputes, and that processors should publish information identifying how their pricing offers apply to individual farm production characteristics.

We did however have some concerns about the report’s findings on supermarket dollar-a-litre milk and the impact on farm-gate prices, particularly in Queensland and likely in NSW and South Australia.

Given the primary issue driving the Inquiry is the balance of power between the processors and farmers, the ACCC has been particularly interested in the DFMC model with Lion. The key elements that make our model work are:

  • The Milk Supply Agreement which ensures that Lion negotiates with DFMC, which is not the case for all collective bargaining groups.
  • We have provision for disputes to go to an independent expert for binding determination (part of the report recommendations) meaning both parties must be reasonable in their positions and/or offers.
  • That DFMC is well funded, enabling us to be in a strong position in negotiations and any legal proceedings.

It’s clear DFMC has been a respected and influential contributor to the Inquiry with some of the initial DFMC submission recommendations being taken up. John Bywater’s experience and knowledge in the industry is a great asset to the Board and the co-operative generally.

The DFMC submission is online at the ACCC Dairy Inquiry website, together with those from all parties.