ACCC now targeting Unfair Contracts

Apr 07, 2017

The new unfair contract terms law is a priority for the ACCC in 2017. It will ensure small businesses, including those which are farms, receive the right type of protection.

We have been advised that the ACCC will be taking enforcement action against a number of companies across a range of industries over business-to-business unfair contract terms this year.

For the past six months, ADF together with State Member Dairy Organisations and Processor Members of the ADPF have been working on the Code of Practice for contractual agreements between farmers and processors. The development of this code is instrumental in protecting dairy farmers from unfair clauses and protecting our processors from incurring millions of dollars in fines. Now with full industry support, the Code of Practice is due to be finalised shortly.

The ACCC has reinforced the importance that if you operate a small business, you may be required to enter into standard form contracts with other businesses for goods and services. All dairy farmers should check the contracts they have with suppliers of inputs, like grain, to ensure they conform to the new legislation. The Australian Consumer Law now prohibits unfair terms in most of these contracts.

In their communications, the ACCC stated that it was no secret that traders (typically larger businesses) put potentially unfair clauses in their agreements, such as terms that give them:

  • an unreasonable ability to cancel or terminate an agreement
  • broad and potentially unreasonable powers to protect themselves against loss or damage
  • the ability to unilaterally change the terms of the contract
  • unilateral discretion to reject or downgrade produce
  • an unreasonable ability to limit or prevent small businesses from exiting their contracts. 

To be 'unfair', a term must:

  • cause a significant imbalance in the parties' rights and obligations
  • not be reasonably necessary to protect the legitimate interests of the party advantaged by the term, and
  • cause financial or other detriment (such as delay) to a small business if it were relied on. 

If you come across terms in a standard form contract you have been offered or you have entered into, and which you think may be unfair, you can report it to the ACCC Infocentre

For more information, including the definition of a small business and the meaning of 'unfair' contract terms, please see the ACCC website

John McQueen

Interim ADF Chief Executive Officer

 

Lessons learnt from the Senate Inquiry

Feb 09, 2017

Last week ADF were asked to speak at the Senate Inquiry in Shepparton, Victoria.

Before it was our turn, we listened to a number of dairy farmers from the region offer valuable insight into an industry that has seen its fair share of hard knocks.

Centred around a few general themes, the dairy farmers talked about having greater transparency between processors and suppliers, contract fairness, and a lack of faith with industry body leadership.

Firstly, we believe that the dairy industry needs improved contracting arrangements between farmers and processors; greater transparency through earlier and clearer pricing signals for farmers; and less risk for farmers and more balance in risk along the supply chain.

In relation to greater transparency, ADF is in the final stages of completing the draft Code of Practice. We have worked in consultation with our state member organisations, farmers and processors, and the ADIC to develop a Dairy Industry draft Code of Practice for contractual arrangements to help ensure greater transparency and fairness in milk supply and pricing. This will also minimise the chances of what happened in April/May last year being repeated.

ADF believes that it is important that contracts are fair, simple, realistic and easily understood by both parties ensuring there is more balance for farmers along the supply chain. The Code of Practice will help ensure that supply agreements and contracts comply with the Unfair Contracts law that came into effect on 12 November 2016.

This unfair contracts legislation extends existing protections against unfair contracting practices and is a practical step, that when coupled with the dairy industry Code of Practice, will provide dairy farmers with fairer and more transparent contracts.

ADF will continue to work with farmers, processors and our industry bodies to build a system that builds resilience, rather than leaving farmers vulnerable.

Lastly, while it is important to acknowledge the things we do well as an industry it is also important to recognise the things that we could do better. The farmers have spoken and we have listened.

While we are busy working on and achieving important outcomes for farmers, a lot of work goes on behind the scenes that we don’t often communicate to our members well enough. We hear this and are endeavouring to do better.

It’s also important to note that the ACCC Inquiry into the Dairy Industry has started. If you are a dairy farmer and can attend one of the public forums the ACCC needs to hear from the ‘horse’s mouth’. The key issues to be considered in the Inquiry include competition between milk processors, the effects of private label products and pricing, contractual practices, availability of price, global markets and key factors influencing the profitability of dairy farms.

 

The next public forums will be held on:

  • Tuesday 14 February 2017, Traralgon, VIC
  • Monday 27 February 2017, Warrnambool Golf Club, Warrnambool, VIC
  • Tuesday 28 February 2017, Shepparton Golf Club, Shepparton, VIC
  • Thursday 16 March 2017, Mercure Sanctuary Golf Resort, Bunbury, WA
  • Monday 20 March 2017, Hahndorf Football Club, SA
  • Wednesday 22 March 2017, Burnie Golf Club, Camdale, TAS

 

For more information and to register your interest please visit https://consultation.accc.gov.au/compliance-enforcement/accc-dairy-inquiry-farmer-consultation-forums/

John McQueen

Interim ADF Chief Executive Officer

 

Setting the Foundations for Long Term Solutions

Oct 28, 2016

Earlier this week, ADF spoke at the Senate Economics References Committee inquiry into Australia’s dairy industry.

We discussed a number of key historical points and highlighted long term solutions we believe will relieve some of the pressures faced by our dairy farmers.

Through consultation with our state member organisations, we proposed a number of solutions:

- The development of the Code of Best Practice on milk supply contractual agreements to ensure transparency and fairness in milk price arrangements

- To ensure that the ACCC review identifies and investigates sharing risk along the supply chain, supply agreements and contracts, competition, bargaining and trading practices in the industry and the effect of world retail prices on profitability

- Incorporating an effects test to show the impact of anti-competitive behaviour

- The implementation of a world dairy commodity pricing index and educational program for farmers to better understand the impacts of the world market price and impact on the domestic market

We reiterated the fact that although the dairy industry has gone through a difficult time, we are a resilient industry with a long, sustainable future ahead and our profitability depends greatly on the continued support of the Australian public.

Which takes me to my last point. The proposed 50 cent milk levy.

Yesterday evening I took part in an extended interview with a major TV network. On several occasions I stated that ADF did not support a levy being applied to drinking milk (50 cents or otherwise).

The 20 cent quote came from a completely different part of the interview (which was not aired) yet edited in a way that was out of context with the questioning. I said, it would be good if Coles were to increase the price of $1 milk by at least 20 cents.

Media does not always represent the facts and important messages can get lost in the push for ratings and dramatic intrigue.

We have contacted Channel 7 News to clarify that the impact of its editing together two different part-answers to two different questions has effectively contributed to misleading Australian consumers.

It is unfortunate when these things happen. Incorrect information leads to confusion in a time when we need open and transparent messaging. Our priorities have always been to work to strengthen the dairy industry’s foundations so we can achieve long term stability.

To get through this difficult period the industry needs strong leaders with one voice.

ADF together with our state member organisations believe a united vision is the key to achieving positive outcomes going forward.

David Basham

Acting ADF President


 

 

Keeping our dairy farmers competitive

Oct 21, 2016

Competition laws are about to change. Australian Dairy Farmers (ADF) has lobbied hard for these changes and worked with many different organisations to represent the needs of farmers.

Since January 2011, Coles and Woolworths have continued to cause unnecessary worry for farmers by devaluing products in the supply chain. Milk was the first weapon of choice in their discount war as it was a household staple and something that consumers were emotionally attached to.

However, milk is not the only dairy product that has been devalued in the price war. Other Australian staples such as cheese, yogurt and butter have also seen a significant price drop that further provokes an already besieged industry.

After almost six years of unsustainable pricing, consumption of dairy in Australia has dropped. Data collected by Dairy Australia clearly shows that cheap dairy has failed to deliver on the major supermarkets claim that lower prices will increase consumption. Their marketing strategy has resulted in millions of dollars being taken out of the value chain, which has impacted severely on many dairy farmers.

The battle for the hearts and dollars of Australian consumers has distressed the dairy industry, threatened small shopkeepers and prompted a Senate inquiry.

In mid-March, the federal Senate launched an investigation into dairy pricing and whether Australia's supermarket giants engaged in anti-competitive practices.

ADF was at the forefront on advocacy and policy demanding change in an industry that caused unnecessary financial pain and worry for farmers through the devaluing of dairy as a product.

The senate inquiry resulted in the Australian Government issuing a draft amendment to the Competition and Consumer Act 2010 outlining a number of changes ADF has been pushing for.

Most significantly, the draft Bill enables the introduction of an ‘Effects Test’ into Australian competition law. The effects test is a logical tool in the Australian Competition and Consumer Commission’s (ACCC) kit bag that most other developed countries in the world have.

ADF has long-advocated for change to tackle big business misusing its power and reducing competition in markets. There is no silver bullet to fix the imbalance of market power that dairy farmers experience, however ADF, together with our state members, are continuing to fight for farmers.

Even though this is an ongoing issue, we are still pushing for the major supermarkets to raise the price of dairy to a sustainable level. This will ensure a fair price for everyone along the supply chain.

David Basham

Acting ADF President

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