This week, ADF President, Terry Richardson, took part in his first Animal Health Australia
(AHA) industry forum in Canberra.

The meeting was called to discuss a range of topics including the management of the Emergency Animal Disease Response Agreement (EADRA), a unique contractual
arrangement between Australia’s governments and industry groups to collectively reduce the risk of disease incursions and manage a response if an outbreak
occurs.

Based on his first impression, Mr Richardson said the familiarisation and training offered to industry in the event of an outbreak is second to none.

“It is reassuring that as a collective we can come together with a shared goal of enhancing on farm bio-security practices and regulations.

“The degree of expertise and good management of our animal health and welfare issues means we are able to respond to any situation and manage any diseases
to minimise their impact on farmers.

“This high level of preparedness is vital to show just how fast we, as an entire commodities industry, are able to respond to any outbreak should an issue
arise”, said Mr Richardson.

Mr Richardson also took part in training for the National Management Group who have overall management responsibility in the event of an exotic disease
incursion in Australia.

“The spread of the white spot virus in the SE Queensland prawn industry really highlights the threat posed to all agriculture from failing to maintain
Australia’s strict biosecurity defence capabilities.

“It is important that we have adequate resources at the national and state levels, or we risk great (and increasingly) severe consequences.

“A large outbreak such as Foot and Mouth Disease would have significant repercussions and cost our economy up to $16 billion”, Mr Richardson said.

ADF has strong group of staff and farmers who are well prepared to respond to the threat of disease to safeguard the dairy industry and Australia’s reputation
as a producer of safe, clean food.

In addition, resourcing of biosecurity remains a high priority for ADF and all industry bodies including AHA Industry Forum are encouraged to continue
to pressure all governments in recognising this as a priority in the national interest.

John McQueen

Interim ADF Chief Executive Officer

It is no
secret that gas prices are on the rise.

An essential resource, gas is used to pasteurise milk and produce the heat needed for our driers to create milk powder.

Gas is already a significant input cost for dairy processors in Australia. Based on reports, gas prices are forecast to rise between 50-100 per cent by
2019. This will impact the processing of dairy and increase the manufacturing costs of milk products. The impact of any gas price rises can and will
be felt by dairy farmers through their processors.

The rise in gas prices are due to supplies being diverted to meet international liquefied natural gas supply contracts, low levels of exploration and forecast
production, restrictions on onshore exploration and development in some states and territories, and infrastructure constraints. Tighter gas supply
translates to higher gas prices.

As the laws of supply and demand would suggest, Australians, sitting on bountiful gas reserves, should be enjoying cheap gas prices. But that’s not the
case as a high percentage of our gas is being exported overseas.

Further to this, last year, the Victorian Government with bipartisan support banned unconventional gas exploration, including the controversial process
of hydraulic ­fracturing (fracking), and extended a morat­orium on onshore conventional gas exploration until the end of the decade.

New South Wales and Tasmania also have various bans on onshore gas exploration and development in place. This means that the competition by domestic and
international consumers for gas from existing fields will intensify, which will drive up prices further.

There are surely many policy levers that can be considered in this environment. One such lever was implemented more than 30 years ago, and formalised in
2006, as the North West Shelf offshore gas production was being developed. The WA Government implemented a policy of domestic reserve of 15 per cent
to ensure their domestic market was not adversely impacted from the development of export markets.

It is understandable why many communities and farmers are concerned with hydraulic ­fracturing (fracking), and why there was bipartisan support to ban
this type of unconventional gas exploration. However, we support onshore conventional gas mining which currently has a moratorium and, according to
the Australian Competition & Consumer Commission, is needed as insufficient reserves exist for domestic and international demand.

In response, the COAG Energy Council will be implementing a package of reforms. Even so, there is still uncertainty whether sufficient gas will be available
to meet future domestic demand.

The dairy industry along with other manufacturers are concerned about the policy failures in Australia when it comes to gas availability and prices. We
need to add our voice to the growing list of industry groups who are calling for urgent action to address the shortage of gas on the domestic market.

John McQueen

Interim ADF Chief Executive Officer

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

Today, it was announced that there will be no change to the dairy levy.

This decision was made by the Levy Poll Advisory Committee (LPAC), whose core role is to make recommendations regarding the level of farmer levy funding
to support the long-term research, development and extension strategy for the dairy industry.

It is important to note, per the ‘Explanatory Statement’, issued by Authority of the Deputy Prime Minister and Minister for Agriculture and Water Resources
that the changes may provide Dairy Australia with savings of up to $1 million every five years, which could be re-directed towards research & development,
plus marketing and promotion activities for the benefit of the dairy industry, including dairy farmers.

Given the announcement of the LPAC decision, there will likely be some opposition to the recommendations. Therefore, it is important that there is a good
understanding of the process which formed the LPAC and what could happen as a result of the recommendation.

Background

During 2015, there was a levy poll review process undertaken to consider the requirement for Dairy Australia to hold a levy poll every 5 years.

That process led to a recommendation to levy payers to change the regulations and form the LPAC, which would undertake a review of levy funded activities
and make recommendations to industry on whether a levy poll to change the levy rate was required.

Levy payers voted in late 2015 to accept the proposed changes to the levy setting process. New regulations to give effect to the changes were signed by
the Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce in late December 2016.

The LPAC was convened several times in the second half of 2016 to consider whether a levy poll should proceed in 2017 as was required under the previous
regulations. These LPAC meetings were based on draft regulations which were expected to be signed off late in 2016.

Australian Dairy Farmers and Dairy Australia, under the new regulations process, were required to provide the LPAC with a joint paper and recommendation
on what should happen with the levy rate. The joint recommendation was for no change in the levy rate.

The major piece of information available to inform farmers will be the LPAC report which gives an outline of the work it did, what information it used
in arriving at its recommendation(s), who it consulted with, its assessment of the value of the DA levy, etc.

Set up and composition of the LPAC

The six initial members of the LPAC were nominated by Australian Dairy Farmers, Dairy Australia and the Australian Dairy Products Federation. The initial
members formed a selection panel that proceeded to select up to nine milk producer levy payer representatives who applied to become members of the
Committee. All levy payers were invited to apply for one of the nine levy payer positions.

All the details around this are on the Levy Poll Advisory Committee web site – www.dairylevypolladvisorycommittee.com.au

What happens next?

As required by the new regulation requirements, the Chair of the LPAC – John Lawrenson, is required to advise Dairy Australia’s Chair and Minister Joyce,
of the decision of the Committee. This happened this week, along with the media statement issued by the LPAC.

Dairy Australia has 14 days from receipt of the decision of the LPAC to advise all levy payers of the outcome.

Any levy payers wishing to oppose the LPAC recommendation and propose an alternative option can initiate a petition.

Levy payers who are Group A members of Dairy Australia and who together represent 15 per cent of total levies paid in the previous financial year, will
have 75 days to lodge a petition with Dairy Australia, requesting a levy poll to be held and specifying their proposed levy option.

If there are one or more petitions which each represent at least 15 per cent of the total levies paid, then Dairy Australia will be required to hold an
Extraordinary General Meeting (EGM) at which Group A members of Dairy Australia will have the opportunity to vote to either proceed or not proceed
with a levy poll.

If the resolution to hold a levy poll is passed at the EGM, Dairy Australia must present the petition and the results of the vote to the LPAC within 14
business days after the resolution is passed.

The LPAC must also request Dairy Australia arrange a levy poll as soon as reasonably practicable and must set out the levy options proposed by the petition
and may set out any other levy options which LPAC proposes. LPAC has an ongoing role in the conduct of a levy poll including, but not limited to, information
to be provided to levy payers to use in determining their voting intention.

In the event of no petitions which represent 15 per cent of total levies paid within the 75-day period, the levy rate remains unchanged and there will
be no Levy Poll.

What could happen

During the last levy poll, there was a reasonable percentage of farmers who voted for a zero levy, so it is not unreasonable to expect there will be one
or more groups who will organize a petition to have a levy poll with a levy rate less than currently applies, or set to zero.

To guarantee the fair and democratic rights of all levy payers who are the Group A members of Dairy Australia, ADF believes it was important that provision
was made in the new regulations to ensure there was a process to allow different views among farmers to be considered.

Whether a petition reaches the full 15 per cent threshold to trigger a EGM of Dairy Australia Group A members will be the issue.

If there is a need for an EGM because of one or more petitions to Dairy Australia, then ADF will need to be clear about why it recommended, jointly with
Dairy Australia, that the levy rate should remain unchanged.

This will be a process ADF must manage during the leadup to a required EGM of Dairy Australia but may also need to be engaged in the debate during the
75 days in which a petition can be presented.

To read the explanatory statement of the Legislation, visit https://www.legislation.gov.au

For further information regarding the Dairy Levy Poll process review, visit
www.dairylevypollreview.com.au

John McQueen

Interim ADF Chief Executive Officer

Back in November 2016, we welcomed the announcement by the
Murray-Darling Basin Authority (MDBA) to reduce the northern basin target.

It was pleasing to see the MDBA proposing to reduce the water recovery targets in the Northern Basin by 70GL following a rigorous socio-economic analysis
in the north, which showed significant adverse impacts on agriculture and regional communities.

So far, 1966 GL had been recovered or more than 70 per cent of the original 2750GL plan for the environment, including 1651 GL in the southern-connected
Basin comprising northern Victoria, southern NSW and SA.

The Basin Plan is affecting water availability and affordability, particularly for dairy farmers in shared irrigation districts. This is presenting a significant
adjustment challenge. The Murray- Darling Basin Authority is due to submit its first five-year review in mid-2017. It has promised to work with States,
regions, community and industries to inform this review.

The most affected by the Basin Plan is the Goulburn Murray Irrigation District (GMID) which supply’s more than 80% of the Basin’s milk.

It is imperative that any further implementation beyond the 2750 GL Basin Plan is done in a way that balances social, economic and environmental outcomes
in a way that limits any potential negative socio-economic impacts of water recovery.

ADF is working closely with our state members and in partnership with the NFF and other commodity and irrigation industry peak bodies to get the best outcome
for the industry.

In response to the current implementation of the Basin Plan, ADIC will be focusing on the following policy positions in 2017:

• Meet the 2750GL target in full before considering the 450GL ‘upwater’ provided no additional negative socio-economic impacts are caused.

• Review the modelling to account for the full 650GL in offsets as long as the environmental works can deliver similar or better outcomes to 2750GL
  with less water.

• Assess the potential socio-economic effects of the 450 GL ‘upwater’ before commencing any recovery of it.

• Change the socio-economic neutrality test so that it is measured on a community level.

• Call on the Ministerial Council (MINCO) to determine the terms of reference for the socio-economic impacts study.

• Request environmental water efficiency be maximised before recovering water from irrigation communities.

What we need now is the Murray Darling Basin Plan and the law that sits behind it to have the same flexibility as our policy position. The Basin Plan is
already having a significant impact on farmers, manufacturers and the rural communities they support, with more to come as recovery deadlines approach.

Terry Richardson

Acting ADF President

As you may
have heard, David Basham stood aside as ADF President last week for a period of three months. His decision to run for the Seat of Finniss in the South
Australian State Government came about quite suddenly, we wish him every success with his campaign.

Another announcement was the appointment of Terry Richardson to act in the role of ADF President. Terry Richardson jointly operates a dairy farm with his
family in Deans Marsh, south west Victoria, where he has lived since 2004 and has a 550-milking herd.

Terry was appointed as an Australian Dairy Farmers Business Director in November 2015 and was the logical choice for acting President due to his background
and experience.

Holding several positions in the dairy industry, both in New Zealand and Australia, he was a director of Kiwi Co-operative Dairies for seven years as well
as a dairy consultant with Agriculture New Zealand. After moving to Australia, he joined his local UDV branch and was later appointed to the South
West Regional Extension Committee. He was previously Chairman of Warrnambool Cheese and Butter Company and has been a director of the company for eight
years, a role he still holds.

There has been some talk in media circles that Terrys position at the Warrnambool Cheese and Butter Company is a potential conflict of interest.

The ADF Board asked Terry to act as the ADF President during the period of leave David has taken from the ADF Board. Members of Boards of most organisations
can occasionally have circumstances where there could be a possible conflict and the important thing is that the Board members recognise the possibility
of conflict and manage it accordingly.

This year has presented unprecedented challenges for the entire dairy sector. ADF has remained focused on laying strong foundations that builds resilience
rather than leaving farmers vulnerable and we will continue to advocate strongly on their behalf.

The events of 2016 have given ADF the opportunity to really cement our working relationships with state members – QDO, NSWFarmers, SADA, TFGA, UDV, WAFarmers,
and industry partners such as Dairy Australia and Australian Dairy Products Federation.

Continuing to work together will give us the know-how and resilience to support dairy farmers to overcome adversity and thrive in the long term.

This season has been one of the kindest seasons we have had in many years. The extended season of grass growth has improved bottom lines and with world
market prices continuing to strengthen over the second half of the year, things are looking much better for the future than they were mid-year.

May 2017 treat everyone in the dairy industry better than 2016 and we wish everyone a Merry Christmas and a safe, prosperous New Year.

Australian Dairy Farmers

ADF has long-advocated for change to tackle big business misusing its power and
reducing competition in markets.

Yesterday, the last day of Parliament for 2016, Treasurer Scott Morrison announced the introduction of the s46 ‘effects test’ legislation 2016 into the
Federal Parliament.

The introduction of an effects test is in line with competition policy around the world – Australia will be joining the clear majority of developed nations
who already have established effects tests.

The provision, which will be included in section 46 of the Competition and Consumer Act 2010, will address the current unequal distribution of market power
and encourage transparency to the benefit of producers, consumers and retailers.

The considerable amount of work, investment, planning and risk required to produce, transport, process, distribute and deliver a perishable product, fresh
milk, on a daily basis is not reflected in the current discounted price of dairy by major retailers.

Supermarket discount tactics are directly affecting market supply and demand functions, effectively blocking processors from being able to provide necessary
stronger prices to farmers to stimulate milk production.

We are looking forward to the ‘effects test’ legislation being passed early next year.

Another major development that occurred in Parliament yesterday was the resolution of the backpacker tax.

ADF have consistently said that we believe it is reasonable for backpackers to pay some tax, but 32.5 per cent was too high.

Led by National Farmers Federation (NFF), ADF and our state member organisations have lobbied for a decision over the past 18 months and we can honestly
say it is a huge relief.

The impact of months of indecision have been felt across the dairy sector. What we really need now is to get the message out there that backpackers are
welcome on our farms and they will receive a fair tax rate for their work.

We thank the NFF and our members for their hard work to get this across the line. We know that this has not been easy and the process was long, however,
we adapted and united as an agricultural industry to secure a deal which benefits farmers, backpackers, tourism and regional communities.

It is important to note that although we are small team at ADF, we remain committed to driving strong policy to transform the way our industry operates
for the better.

David Basham

ADF President

The American people have spoken and made their choice. It is amazing how
things can change overnight. President Elect Trump’s victory in the United States presidential election has created a little bit of a stir in Australia
and around the world.

Australia has an open economy and we are heavily reliant on exports. We depend on international stability and open borders to drive our economic growth.
If Mr Trump’s views, which were expressed during the election campaign are realised, then the world trade environment is in for a very bumpy ride.

The Turnbull government promised that the ratification of the Trans Pacific Partnership (TPP) would deliver valuable new markets for Australian dairy.
It was an ambitious pact that would have covered nearly 40 per cent of the global economy and solidified US leadership in the Asia-Pacific.

While Mr Trump’s election win has made the ratification of the TPP less likely, it is not all bad news for Australian dairy.

In fact, this election could open Australia to new opportunities and strengthen economic ties with countries in ways we never thought possible.

The China-Australia Free Trade Agreement (ChAFTA), ratified almost a year ago is a partnership that has the potential of becoming even stronger.

Australian Dairy Farmers (ADF) lobbied hard and strong for this once-in-a-lifetime deal and was closely involved in the negotiations.

Our dairy exports to Greater China have increased 46 per cent over five years, making it our largest dairy market export by volume and value. Import values
have increased by almost 65 per cent year-on-year from approximately $456 million in 2014/15 to over $750 million in 2015/16.

The first half of 2016 saw the value of Australian dairy exports double. China’s market for Australian consumer goods has become much more sophisticated,
with strong sales growth from supermarket chains and convenience stores. A growing middle class of roughly 300 million people want what Australia offers.
Our industry’s ability to benefit China with safe, healthy, reliable sources of quality dairy products is essential for us in the long term.

China remains the largest importer of dairy products and it is still growing. About 16 million babies are born each year in China, and with the relaxation
of the one child policy, that number is projected to beyond 20 million annually in coming years.

Over the long term, ChAFTA means more jobs across the Australian dairy industry both on farm and in processing plants. It will provide our industry with
the confidence it needs to invest for a strong future.

Whatever transpires from the policy direction of a new US President and administration, the Australian dairy industry and Australian Government will do
everything possible to ensure any changes in direction on US trade policy does not adversely impact the gains we have won for our dairy products access
to markets.

The dairy industry’s long term growth will come from our ability to bounce back and make the most of the all the opportunities that are presented.

David Basham

Acting ADF President

Over the past two weeks we have seen an 11 per cent rise in global dairy prices.
This has been the highest since July 2014. Historically low for much of 2016, prices have finally started to increase. It is a really positive sign
that things are looking up for us.

As an industry we have been under intense pressure and with that intense scrutiny. The events of this year has given ADF the opportunity to really cement
our working relationships with state members – QDO, NSWFarmers, SADA, TFGA, UDV, WAFarmers, and industry partners such as Dairy Australia and Australian Dairy Products Federation.

Continuing to work together will give us the know-how and resilience to support dairy farmers to overcome adversity and thrive in the long term. These
things will only happen if there is buy-in from industry and a willingness from key stakeholders to hear each other out to develop solutions together.

The industry wide proposed code of practice on contractual arrangements with farmers is an ideal starting point to get things moving in the right direction.
It has been a long process and a major breakthrough for the entire industry to ensure future milk supply agreements are balanced, fair and transparent.
ADF is expecting to have a near final document by the end of November.

As you may be aware Dairy Australia has just released their forecast for full-year, national milk production for this season.

The current projections indicate that national milk production is down by 6-8 per cent for the 2016/17. However, these projections are in direct response
to the extraordinary period the industry has gone through given the low farmgate milk prices, tight margins and extremely wet conditions across southeast
Australia.

The last five months of wet weather has been challenging for many farmers. Yet, there are some really positive outcomes. Pasture growth will keep production
costs down well into December. Many dairy farmers can reduce the cost of production by saving on surplus feed and water prices in Northern Victoria
will remain under $100 per megalitre well into 2017.

While dairy farmers are still managing the here and now, our attention is firmly on the future sustainability and profitability of the dairy industry.
ADF is working towards addressing volatility to safeguard the future of our industry.

David Basham

Acting ADF President

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

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

Collaboration is the key to get us where we need to be. Our industry relies
on all the elements to operate effectively. Farmers need processors and vice versa – so the solutions require all of us to come together to ensure
a positive future. It is a win win situation.

It is one thing to constantly pick apart the industry to highlight the problems, it is another to actually work together to bring about real solutions
to ensure this never happens again.

Last week the Australian Dairy Farmers held an important meeting with state dairy organisation presidents and processors to address a range of contractual
issues which farmer organisations have been trying to address and rectify for 15 years.

During the meeting we discussed a range of topics including the difficult circumstances of farm gate price reductions, the introduction of new legislation
on unfair contracts which comes into effect in November and the outcomes from the August Symposium held by Deputy Prime Minister, Barnaby Joyce.

This meeting provided an ideal opportunity for the dairy industry to unite and develop a voluntary industry wide code of practice on contractual arrangements
with farmers.

The code will include:

– greater transparency in contracts and supply agreements

– ensuring a pricing formula or a price setting mechanism is clearly defined within a contract

– ensuring pricing adjustments to farmers throughout a contract are clearly defined and that there will be no retrospectivity

– while acknowledging step ups do occur and step downs have occurred in severe circumstances, a principle should be incorporated into contracts
which clearly outlines that as much notice as possible is necessary if a step-down has to occur

– ensuring farmers should receive all payments that accrue over the term of a contract or supply agreement – the final payments of a contract should
not be contingent on the farmer being a supplier when, for example, the June payment is made in mid-July

– ensure that where a processor has a contracted volume limit or a different price for volume above a particular level then exclusivity of supply
to that processor must not occur

– ensuring there is a clearly defined mechanism for giving notice of termination of a contract

– ensuring there is a clearly defined mechanism of how contract terms and conditions can be modified and the farmer having the right to a negotiated
variation, not simply a request from the processor.

Incorporating these principles into a code of conduct will give farmers, or their representative, the opportunity to have a contract or supply agreement
which is truly negotiated and not simply an agreement which is a “take it or leave” it approach to farmer’s milk supply arrangements.

The ADF together with the state member organisations have worked hard since the crisis unfolded to ensure future milk supply agreements are balanced, fair
and transparent. It has been a long process to get to this stage and a major breakthrough for the entire industry.

State dairy farmer organisations have been working to achieve these improvements for many years. By having a national organisation which is well resourced
the States can achieve things together that would be impossible to achieve on their own.

We plan on finalising the draft code as soon as possible, ahead of the new legislation and before the Australian Competition and Consumer Commission inquiry
into the dairy industry is finalised next year.

Now more than ever, the dairy industry needs to remain focused and united in its goals to achieve a shared vision of improving the profitability and sustainability
of dairy farmers and the entire dairy industry in Australia.

David Basham

Acting ADF President