WorkCover for dairy farmers: reality vs myth

Dairy farmers get injured. A lot. But how many of us think about workers compensation until there’s a serious incident?

I invited the author of “WorkCover that Works”, Mark Stipic, to bust some of the myths for dairy farmers. I highly recommend the book, which is packed with practical information yet easy to read, even after a long day in the paddock!

Thanks very much, Mark!

red myth circle

Recently, I had a conversation with Milk Maid Marian thanks to an introduction by our mutual colleague Kevin Jones from SafetyAtWorkBlog.

We discussed WorkCover in the context of the dairy industry. The more we talked, Marian discovered there could be many dairy farmers out there sharing some misconceptions about how WorkCover works.

Dairy farming is what I’d call a pretty high-risk industry. In Victoria the WorkCover Industry Rate for ‘Dairy Cattle Farming’ is 4.546% in 2018/19. This means many dairy farmers are paying more than 4.5% on top of their labour costs in WorkCover insurance alone. The average premium rate across all employers in the state is 1.272% so by comparison, you guys pay quite a lot.

Here are 5 common myths (and 5 harsh realities) about WorkCover in Victoria.

Myth 1: WorkCover is just another type of commercial insurance

The reality: WorkCover is more like taxation than insurance

First let’s compare WorkCover insurance to car insurance. When insuring your motor vehicle, you can browse the market, negotiate rates and compare the benefits of different policies. You can usually change insurers as often as you like. Once you have a reasonable claims history, you can request a lower rate or threaten to switch providers.

However, when it comes to WorkCover, each year the Victorian Government releases industry rates that are used to determine how much you’ll pay. Legislation determines your level of coverage. You cannot negotiate a better deal, not even through an insurance broker. Restrictions are in place that affect how often you can move your policy to another provider.

The WorkCover scheme is heavily regulated and WorkSafe Victoria has the authority to audit your business at any time. They even share information with the Australian Taxation Office and State Revenue Office to target employers who aren’t paying their fair share of WorkCover premiums. That’s all very different to other forms of insurance.

Myth 2: There are 5 WorkCover insurers in Victoria

The reality: There is only one insurer – WorkSafe

WorkSafe Victoria is the trading name of the Victorian WorkCover Authority. This is the state government agency responsible for OHS matters, employers’ WorkCover premiums, and claims for compensation by injured workers.

WorkSafe has appointed five agents to administer premium- and claims-related matters on their behalf. These are Allianz, CGU, Employers Mutual Limited (EML), Gallagher Bassett (GB) and Xchanging. These companies are often referred to as ‘the insurer’. But don’t be mistaken, they are not insurers. They are agents of WorkSafe.

When you pay your annual WorkCover premium, the money goes to the WorkSafe scheme, not to your WorkSafe agent. Even though the notices will display a logo from one of the five companies listed above, the agent is merely the administrator of the premium collection process. So be aware that, for WorkCover purposes, you are not dealing with an insurer per se, but with the third-party administrators of a state government agency.

Myth 3: I don’t need WorkCover insurance because I’m the only person working in my business

The reality: You don’t get to decide whether or not to take out a WorkCover insurance policy – either you’re required to have it, or you’re not eligible for cover

As I stated above, WorkCover is much like taxation. And you don’t get to decide whether or not to pay taxes – if you meet certain criteria, you must pay. Well, the same goes for WorkCover.

With regard WorkCover insurance, if WorkSafe finds out that you were uninsured for a period of time, they may audit you and sting you with back-payments and penalties.

So, if you’re the only person working in your business, how do you work out if you should have a policy or not?

Generally, if you are a sole trader or a partner in the business and have no other employees then you cannot take out a WorkCover insurance policy. This means you don’t have to pay, but it also means you aren’t covered in the event of an injury.

However, if you have a Pty Ltd company, you could be an employee of the company (even if you are the only employee and the business owner). In this case it is likely that your company should have a WorkCover policy. Regular payments made to you would need to be declared to WorkSafe and used in your premium calculation.

The best thing to do is contact one of the five WorkSafe agents and explain your business structure, including how you pay yourself. They will guide you through the policy registration process if appropriate or confirm you are ineligible for coverage.

Myth 4: WorkCover insurance will protect my business from the costs of an injury claim

The reality: Some employers will experience premium increases that significantly outweigh the actual amounts paid on the claim

If your business pays over $200,000 rateable remuneration (which is basically WorkSafe’s term for ‘labour costs’) then the costs paid on your WorkCover claims will be used in calculating your premium. If you have higher claims costs than the average for your industry, you can expect to payer higher than the average rate applied to your sector.

Having worked with hundreds of employers in many different industries I have observed that the system doesn’t treat every business fairly. Generally, small businesses in low risk industries (eg. A local real estate agency) will be well protected from the costs of a claim. For example, if an injured worker received $10,000 in WorkCover payments, the employer’s premium might go up a total of $1000 over the life of the claim.

But medium-to-large employers, especially those in higher risk industries, often experience premium increases that outweigh the actual costs paid on a claim. $10,000 paid to an injured worker could result in $40,000 additional premium over the life of the claim.

It’s difficult for me to explain the nuances of this risk in this relatively brief blog post. In the dairy industry I’ve found the tipping point is that if you pay more than $400,000 labour costs, you face a risk that a single WorkCover claim could lead to significant additional premiums to be paid. And that can decimate your bottom-line profits. You would be well advised to grab a copy of my book and pay close attention to the section on ‘sizing factor’ where I further unpack this topic.

Myth 5: I don’t need WorkCover for contractors

The reality: Some contractors are considered ‘deemed workers’ by WorkSafe. They attract additional premiums for your business, plus they could be eligible to lodge a claim against you

Generally, payments to employees are used to calculate how much WorkCover premium you’ll pay and payments to contractors don’t need to be declared.

While a person might be a genuine contractor for all intents and purposes regarding taxation and benefits, if they earn 80% or more of their income from a single source, they may be considered by WorkSafe to be a deemed worker. And payments to deemed workers are included in rateable remuneration (meaning they count towards your WorkCover premium).

There are many contractors out there who only provide contracting services to just one business. It is likely that the hiring business would be required to declare payments to this contractor as a deemed worker. If you engage contractors, you should brush up on WorkSafe’s guideline around contractors and workers.

Furthermore, WorkSafe has specific guidance around when a sharefarmer would be considered a worker or contractor. I understand this is a common working relationship in the dairy industry and you can read WorkSafe’s position on the topic here.

My advice to you

The dairy industry is an incredibly important part of the Australian economy and it’s my privilege to have been invited to share some helpful advice. Here are my top tips for dairy farmers:

  1. If you’ve made an error on your WorkCover policy – or perhaps you forgot to set one up when you went into business – sort it out sooner rather than later. The longer you leave it the bigger the problem could become. Plus, WorkSafe is generally more lenient when you self-disclose an error as opposed to when they discover it following an audit.
  2. Get to understand your WorkCover risk now and start taking steps to prevent injuries. Often it is cheaper, less time-consuming and more rewarding to proactively invest in injury-prevention strategies now than to deal with the fallout of a single claim.
  3. Don’t be afraid to seek independent advice. Most employers rely solely on their WorkSafe agent regarding claims strategies. But remember, they are an agent of WorkSafe. They must also provide advice to your injured worker and they may be working towards targets that don’t benefit the goals of your business.

About the author

Mark Stipic is #TheWorkCoverGuy and managing director of Mark Stipic Consulting. He is the author of WorkCover that Works, the only book of its kind written specifically to help employers reduce their injuries, claims and WorkCover premiums.

When you’re ready, here are two ways Mark can help you and your business take control of your WorkCover situation:

  1. Get a copy of his book WorkCover that Works. It will show you how to reduce your injuries, claims and WorkCover premiums.
  2. Request a free, no obligation 30-minute strategy call. Mark will help you address your most pressing challenges and connect you with potential solutions if appropriate.

ADF answers questions about the dairy code

Australia’s peak dairy representative body, Australian Dairy Farmers (ADF), has not yet joined the ACCC and all but one of the state dairy bodies in calling for a mandatory code that would govern the interactions between farmers and processors.

I’m grateful to ADF’s President, Terry Richardson, for answering four questions about the ADF’s approach for Milk Maid Marian.

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Terry Richardson, ADF president

1. Does the ADF accept the ACCC’s finding that the voluntary code was not effective enough?
TR: ADF accepts the ACCC findings that the current industry Code had a positive impact on contracting practices but has been unable to secure participation by all processors, reduce risk and strengthen bargaining power for farmers, independently arbitrate complaints or penalise breaches.

When the Code was introduced, it was agreed that a review would occur twelve months of operation. This included an assessment of its strengths and weaknesses in the context of the ACCC report and industry feedback.

We were aware at the start of the code review process that the next version of the industry Code must have such procedures in place.

It is important to recognise that prior to 1 July 2017, there was no Code of Practice for Contractual Arrangements in the dairy industry, and Australian Dairy Farmers was pivotal in making this difficult yet important first step.

2. If you are still committed to the review of the voluntary code, what resources does ADF have that were unavailable to the ACCC and may have hindered its review?
TR: It is incorrect to assume that the ADIC is conducting its own review with the aim of coming to a different conclusion to the ACCC. The ACCC and ADIC reviews have different objectives.

The ADIC review is focused entirely on how the voluntary code operated, what elements were successful and what needs improving in a new Code of Practice.

We found that relatively little of the ACCC report considered the operation of the current dairy industry Code of Practice despite the shortcomings.

Our concern with the ACCC report was that in recommending a mandatory code of practice, the ACCC did not conduct an assessment against the Australian Government’s threshold test nor did it provide adequate analysis on how this new code would operate.

It is our understanding that it is difficult to amend or alter a mandatory code once it is enacted if farmers determine at some future time that they are unhappy with its operation.

It has been incorrectly assumed that continuing with the ADIC review is an indication that the Council or ADF is opposed to a mandatory code of practice. That is not true.

The ACCC report broadly discussed the different types of codes but we need to review all options and communicate to farmers the benefits and shortcomings of each.

These are significant decisions for the dairy industry and farmers should expect that ADF forms a view that is underpinned by detailed analysis

3. What steps has the ADF taken in response to the ACCC report?
TR: ADF, in conjunction with the Australian Dairy Industry Council, is using the ACCC report as a springboard to revise and strengthen the Code of Practice and act on the other recommendations contained in the report.

We are working with a legal firm who has considerable experience in working with industry codes. While this legal advice is in its early stages, we will work through number of key amendments that should be included in a new dairy industry code, including a dispute resolution mechanism and penalties procedure that would ensure compliance.

We are also using the ACCC Guide to Industry Codes of Practice to ensure a strengthened code is consistent with best practice.

4. What are the next steps and their timeframes?
TR: The introduction of a Mandatory Code would take 15-18 months, and with a federal election scheduled for the first half of 2019, this timeline could be extended as government moves into caretaker mode during an election.

Preparing a strengthened industry Code including dispute resolution procedures is the next step, and we expect this to be complete in the next couple of months.

This work is complex and ADF is proceeding one step at a time, recognising the urgency of moving this work forward.

Thank you, Terry Richardson, for explaining ADF’s approach to a dairy code!

Waging war on weeds: the latest research

laser weed control
Blasting a weed with a laser, leaving it smoking with a high voltage zap or watching it wither under a giant magnifying glass may well be my cathartic farm job of the future.

Waging war on weeds – whether with chemicals or tillage – is set to get a whole lot smarter, more cost-effective and kinder for the environment, thanks to new work at the University of Sydney.

I was delighted when researcher Michael Walsh agreed to give Milk Maid Marian a sneak peek at the direction of his team’s research.

MMM: Farmers traditionally use chemicals or tillage to control weeds. Why should we consider new forms of weed control?

MW: Like many other decisions on farm, cost is the driving factor behind the need to consider other forms of weed control. Herbicides and tillage are both relatively cheap to apply but there are production risks to the use of these treatments.

There is a risk of herbicide resistance that occurs every time a herbicide is applied and once resistance evolves it remains in a weed population forever and therefore the herbicide is no longer useful.

For tillage it is the risk associated with soil disturbance and the lack of selectivity. In a pasture tillage for weed control will result in the loss of grazing for that paddock.

MMM: What are the alternatives being researched at the University of Sydney?
MW: We have been evaluating targeted tillage and more recently laser weeding, but we are also keen to investigate electrical weeding and solar weeding.

Electrical weeding is simply just using electricity to “shock” weeds. A weed is touched with a positive terminal and the earth acts as the ground so the charge passes through the weed burning cells as it goes. In the UK there are commercially available hand held electrical weeders.

Solar weed control

Solar weeding is using the sun to burn weeds. It’s the magnifying glass approach where a lens (grooved plastic sheet) is used to concentrate sunlight on to a weed to burn it. These types of lenses (Fresnel lens) are used in lighthouses to focus light into a strong beam.

MMM: What are the benefits?
MW: Initially the main benefit will be the reduced reliance on herbicides.

There will be substantial savings in weed control costs associated with controlling individual weeds rather than applying a blanket weed control treatment to the whole field. These savings will depend on weed density and it is hope that with good weed identification systems we will be better able to reduce weeds to very low numbers in crop and pasture paddocks.

MMM: Other forms of automated weed control have struggled to identify weeds in pasture. How can this be overcome?
MW: The development of new camera and sensing technologies for cars and phones has created the opportunity for weed recognition and identification. This will allow us to use tillage and other physical weed control tactics to selectively target weeds in crop and pasture situations.

MMM: What needs to happen to make this technology a reality on Australian dairy farms?
MW: I guess the first thing to do is to start working on systems that are able to identify weeds in pastures. Basically it is just a matter of training a sensing system (e.g. a robot) to recognise what is a weed and what is pasture plant. This is typically achieved by building up a library of weed images as they occur in pastures over the growing season.

Thank you very much, Michael, for this glimpse of what farmers can look forward to in the war on weeds! I do hope the dairy community is quick to support such an exciting development for farmers and the planet and can begin building that library of weeds.

ACCC: the cost of a mandatory code

Suddenly, we’re not talking about whether the voluntary code has worked but how much a mandatory code might cost.

Everyone (including lobby body, the Australian Dairy Farmers) was taken by surprise when the CEO of Australia’s largest dairy processor, Lino Saputo told ABC Radio his company would support a mandatory code provided that it wasn’t too expensive.

So, how much would a mandatory code cost? To hear directly from the horse’s mouth, Milk Maid Marian asked ACCC Deputy Chair Mick Keogh a few questions to help explain the costs.

MickKeogh2

ACCC Deputy Chair Mick Keogh

MMM: What are the mechanisms that a mandatory code might use to resolve disputes or breaches and how do they differ?

MK: In its Dairy Inquiry final report, the ACCC recommended the industry should establish a process for an independent body to mediate and arbitrate contractual disputes between farmers and processors (or collective bargaining groups and processors).

The ACCC recommended ADIC should be responsible for establishing the body, and as part of this process should consult closely with farmer representative groups to determine how the dispute resolution process would work.

There are examples in other agriculture industries where an industry body has successfully developed dispute resolution process. For example, Grain Trade Australia administers a dispute resolution process where decisions are made by independent arbiters (that both growers and traders agree on) and disputes can only be brought if there is an arbitration agreement in writing.

GTA publishes detailed Dispute Resolution Guidelines that set out the procedure when parties are seeking to have a dispute resolved. GTA also publishes the decisions of arbitrators on its website (removing the parties’ identities) to allow industry participants to share in the findings and possibly modify their commercial behaviours.

The establishment of an independent mediation and arbitration body is not contingent on legislating a mandatory code for the dairy industry; however the ACCC considers a mandatory code should require that contracts contain terms that provide for an effective independent dispute resolution process.

MMM: Which of these is preferred by the ACCC in the dairy industry’s case and why?

MK: The ACCC’s preference is that ADIC establish an independent body to mediate and arbitrate contractual disputes between farmers (or collective bargaining groups) and processors.

The feedback received by the ACCC indicates there is not an appropriate existing body that could facilitate an effective dispute resolution process in the dairy industry, which is why a new body should be established.

MMM: What costs would the implementation of a mandatory code potentially bring? How large are these costs? Who would bear these costs?

MK: In our final report we outlined several ways a potential code could help address the contracting and bargaining power issues we identified through the Dairy Inquiry. These include:

  • obligations on processors to give timely and transparent information about the terms on which they propose to acquire milk from farmers (including through provision of written contracts and price guidance)
  • obligations on processors not to include contract terms which unreasonably restrict farmers’ ability to switch processors
  • restrictions on processors’ ability to change key trading terms (including prohibition of retrospective price step-downs and unilateral variation of agreement terms)
  • as noted above, requirement that contracts contain an effective independent dispute resolution process.

The ACCC recognises that there is industry and farmer concern about potential cost burdens associated with a mandatory code. However, the ACCC considers the compliance costs associated with the recommended mandatory code, particularly for farmers, would not be substantial.

The ACCC would be consulted on a code proposal and would not support an excessive regulatory burden being placed on farmers.

Farmers’ regulatory responsibilities would only require them to retain signed or acknowledged copies of milk supply agreements and act in good faith in their dealings with processors (similar requirements would be placed on processors too).

For processors, the potential compliance costs could include:

  • updating their contracts so they comply with the code
  • keeping a copy of contracts signed with farmers for a minimum time period, similar to requirements in other industry codes.
  • a requirement to participate in any compliance checks the ACCC undertakes
  • that they inform themselves of the code’s requirements and update their practices to ensure they are compliant.

Records of transactions and contracts currently need to be retained for taxation purposes for seven years, so any code record keeping requirements are unlikely to add any additional administrative cost for processors.

Thank you very much, Mick Keogh, for clarifying the costs surrounding the implementation of a mandatory code.

Why many farmers are unhappy about great prices

A journalist rang me the other day with a really simple question: was I happy about Fonterra’s opening price of $5.85kgMS, the equivalent of about 45 cents per litre?

Simple question. Answering it is not so simple.

Historically, it’s a really good price
Honestly, I can’t remember an opening price this high. For those of you not familiar with the intricacies of our milk pricing system, processors announce an “opening price” at the start of each financial year, which is what they consider a conservative figure that should only increase as the year progresses.

Freshagenda’s chart of this year’s opening prices shows it’s not just Fonterra offering a good start to the year.

ProcessorPrices

Source: Freshagenda

Compare those opening prices for 18/19 with the closing prices over the years in Freshagenda’s chart below. Pretty darn good.

FreshagendaCdtyFgate.jpg

Source: Freshagenda

But farmers need to make up lost ground
Dairy Australia’s revelation that one in five dairy farmers is planning to quit discussed in my last post helps to explain why farmers are not celebrating. We have a lot of ground to make up.

Last year’s Dairy Industry Monitor reported that the Victorian farmers in the project (generally larger and better resourced than the average farm) had a return on assets of just 2.5% in 16/17, following on from 0.6% in 15/16.

Many farmers have higher debt loadings than ever before.

And the big dry is sending the cost of feeding cows skyrocketing
Even with a great price this year, there’s a real likelihood we’re going to struggle again.

The pellets we feed the cows during milking have surged to an eye-watering $400 per tonne while the stream of B-doubles heading to drought-affected NSW is making reasonably-priced hay suitable for milkers impossible to find.

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Bureau of Meteorology: Precipitation year to date

All this while (with the exception of the lucky devils on the SW coast) it’s been horribly dry on farm, with the increasing prospect of another El Nino on the way for Spring.

To top it off, expectations were high
Analysts have been rather bullish, including Freshagenda, which as recently as June 6, wrote:

“Our forecast range for the 2018/19 average southern Australia farmgate milk price has improved to $6.10 to $6.50kgMS with a significant lift in the underlying commodity milk value (CMV) since our April update, which we now see in the range of $5.60 to $6.00kgMS.”
Freshagenda

It’s not just been farmers blindly following the opinions of analysts, either. On May 23, Fonterra increased its forecast closing price for Kiwi farmers to NZ$7.00.

Add this to the hype surrounding competition for milk supply from processors aggressively investing in stainless steel and expectations were sky-high. And the opening prices fell short.

“All I want is a market driven price, not a processor driven price,” one prominent farmer told me after Fonterra’s opening price announcement.

That’s where that second chart from Freshagenda comes in again. Are we getting a fair go? Is all that value adding reaping dividends?

FreshagendaCdtyFgate

So, where to from here? For the final word on all the intricacies of milk pricing, I’ll leave you with this video from the Freshagenda team.

 

Why 1 in 5 dairy farmers plans to quit

One in every five dairy farmers is planning to quit. Not just wanting – but actually planning – to quit.

According to research from Dairy Australia’s Situation and Outlook report released today:

“The proportion of farmers making plans to leave the industry has increased steadily since 2014. At that stage, 10% said they were making plans to leave and this has now doubled to 20% in 2018.”
– Dairy Australia, June 2018, Situation & Outlook Report

“Is it good to have a clean out of the bottom 20%?”
That’s a comment I’ve heard from some rather comfortable industry types but the truth is that those planning to leave simply aren’t all bad farmers.

There’s been an 18-year shakeout of Australia’s dairy farmers since deregulation. Even if you’re in the “bottom” 20 per cent now, you’re not doing too badly.

In my short lifetime, I’ve seen farming become a real science.

Jeepers, I’m in a course right now learning about the metabolism of different kinds of lipids and its impact on cow nutrition! Samples of river water are at the lab being analysed for everything from iron levels to coliforms. And I know the reference ranges for potassium, phosphorous and pH in our soils off by heart.

FIGJAM? No, I’m not remarkable. I’m just surviving.

I suspect the “bottom” 20 per cent right now is more accurately described as the most vulnerable 20 per cent. Almost every farmer is at the bottom sometimes. Even the best starting out with big debts; growing and taking on new debts; or hit with drought, divorce or death are vulnerable.

Yep, a lot of them are the future of our industry. We need them.

Besides, as Mary Alexander put it on Twitter this morning, it’s not just going to be those in the toughest positions who leave – it’ll also be those at the top of their game who can.

Why are 20% of Aussie dairy farmers planning to quit?
Well, let’s be frank. This is the third year in a row where more than a third of dairy farmers haven’t made a profit. Nationally, just 55% of farmers are positive
about their own businesses.

Worse still, farmers lack confidence in the future of Australian dairy farming. According to the S&O report:

“Farmer confidence in the dairy industry’s future stands at 47% in 2018 and this represents the third consecutive year of steady decline in sentiment. Over the past four years, confidence has dropped from 75% to 47%.”
– p. 5, Dairy Australia, June 2018, Situation & Outlook Report

Tellingly, farmers are again considering switching processors at rates that would have been inconceivable before 2016.

Everything changes, everything stays the same
The most demoralising thing about our industry today is that despite all the upheaval, dysfunction, noise and pain, very little has changed.

The processors continue to play opening price games, with the biggest of them, Saputo, only declaring what it will pay from July 1 onwards yesterday and number two, Fonterra, still yet to open as I type.

There has been no commitment – not even a timeframe for decision-making – from our peak dairy advocacy body or the government to implement the ACCC’s recommendations.

And farmers are painfully aware that MG’s transgressions earned it little more than a slap on the wrist while Fonterra has escaped any penalty other than the ravaging of its reputation.

Killing the goose that laid the golden egg
We’ve seen how profitable dairy processing can be and the massive investments processors are making in new capacity. But the goose must be fed. And, this time, I don’t think a couple of good milk prices will do the trick.

 

 

 

ACCC explains mandatory codes

mandatorycode

Since the ACCC recommended a mandatory code for the interactions between dairy farmers and processors, there’s been a lot of talk about what this might mean. To help sort the fact from the fiction, I asked the ACCC’s deputy chair, Mick Keogh, about the fundamentals.

Milk Maid Marian is really grateful to Mick for his explanation.


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Mick Keogh, deputy chair, ACCC

 

MMM: How does a mandatory code differ from a prescribed voluntary code?

MK: There are three types of industry codes – (1) a voluntary code (such as the current Dairy Code), (2) a prescribed voluntary code (such as the Food and Grocery Code), and (3) a mandatory code (such as the Horticulture code).

A voluntary code is one developed by industry which participants voluntarily agree to by becoming signatories, but which has no penalties attached to breaches, and participants can choose to opt out of at any time without disadvantage.

A prescribed voluntary code is one which participants voluntarily agree to by becoming signatories, and which can have penalties or sanctions associated with breaches by participants.

A mandatory Code is one which all the relevant industry participants are bound to abide by, and which may have penalties or sanctions if a participant breaches the code.

The key difference between a prescribed mandatory code and a prescribed voluntary code is that a prescribed voluntary code only applies to industry participants who voluntarily choose to become a signatory to the code. Signatories can choose to withdraw and cease to be bound by a voluntary code at any time (although they will still be liable for breaches that occurred while they were signatories). In contrast, a mandatory code is legally binding on all industry participants specified within the code.

Prescribed voluntary codes and mandatory codes are both developed by Government in consultation with industry participants and the public, and administered by the ACCC. The ACCC can take enforcement action against parties that a prescribed voluntary code or mandatory applies to. Remedies include injunctions, damages, non‑punitive orders and other compensatory orders. Penalties and infringement notices may apply, but are more likely in a mandatory code than a prescribed voluntary code.

Any person who suffers loss or damage due to a contravention of a prescribed voluntary code or mandatory code can also bring a court action for damages.

MMM: What are the pros and cons of each?

MK: In the context of the dairy industry, the ACCC found that a mandatory code is likely to be stronger than a voluntary code in both the coverage of its enforceability and the potential for its substantive obligations to address issues which lead to market failures. We found that dairy processors are unlikely to volunteer to be covered by a prescribed voluntary code that is strong enough to address the market failures we identified in the dairy industry.

MMM: What is the normal process involved in drafting a mandatory code?

MK: If the Government agrees to pursue the creation of a prescribed mandatory code, the process will involve several stages, including stakeholder consultation with businesses, consumers and relevant government agencies, including the ACCC.

Following consultation with the industry, the responsible department will prepare a draft Regulatory Impact Statement, which evaluates the relevant issues and problems in question, objectives of a potential code and options for addressing the identified issues. This statement would be released for public consultation before it is finalised.

Afterwards the Department with policy carriage will draft the text of the proposed code and may  seek public feedback on it.

When it is finalised, the Governor General will make a regulation prescribing the code. The code regulation will then be registered and tabled in each House of Parliament, where it can be disallowed within 15 sitting days in each House.

Treasury processes to prescribe an industry code are set out at: https://treasury.gov.au/publication/policy-guidelines-on-prescribing-industry-codes/process-and-consultation-after-a-decision-to-prescribe-an-industry-code/

MMM: How long does it typically take to put a mandatory code in place?

MK: The time it takes to put a prescribed code in place (from announcement to implementation) will depend on a range of factors.

The time can range from about a month (as was the case for the Wheat Port Code and the Sugar Code) to several years (including a transition period, for example for the Horticulture Code).

MMM: What is involved if stakeholders agree that a mandatory code needs to be revised?

MK: A prescribed mandatory code may be subject to review after it has been implemented. For example, the Sugar Code must be reviewed within 18 months of its commencement, and the Wheat Port Code must have its first review within three years of its commencement.

The review involves a public consultation process to seek feedback from a wide range of stakeholders. A review can be conducted by the Government Department with policy responsibility for the particular code or alternatively by an independent body or industry experts. The review may consider options for repealing the code or amending it.

 

 


 

Dairy crisis in dates disgraces ADF and minister

Here’s a potted history of the dairy crisis. It’s worth remembering:

April 2016                   MG stuns the dairy community with the clawback

May 2016                    Fonterra follows suit, crashing its price

May 2016                    Milk price index announced

August 2016                Ag minister Barnaby Joyce says he will put an end to $1 milk

September 2016          Senate inquiry into dairy industry announced

October 2016             Treasurer Scott Morrison instructed the ACCC to hold an inquiry into the competitiveness of prices, trading practices and the supply chain in the Australian dairy industry.

August 2017                Senate committee report released

November 2017          Consultant chosen to deliver milk price index

November 2017          ACCC Interim report

December 2017           Milk price index consultant sacked

March 2018                 UDV opposes mandatory code

April 2018                   ACCC final report

May 2018                    Milk price index due “mid year”

May 2018                     ADF: “we cannot make a snap decision” on mandatory code

June 2018                     Minister Littleproud: no timeframe for decision on mandatory code “will investigate thoroughly”

So, after all this, where are we today, just two weeks from a new set of pricing for our milk?:

  • No action on ACCC recommendations
  • No milk price index
  • No opening price from either of the big two processors
  • $1 milk AND $6 cheese, with promise of even lower retail milk prices

No wonder farmers are angry. The can has already been well and truly kicked down the road. The independent umpire has spoken.

After two years of investigation and analysis, what justification do the ADF and Minister Littleproud have for waiting any longer to do their jobs and take decisive action to protect dairy farmers?

9 secret drinking habits of dairy cows

DrinkingCows

Following on from yesterday’s instalment of weird and a little bit gross things about cows’ bellies, I figured you might like another one regarding their drinking habits!

  1. The high producing dairy cow has the greatest water requirement per unit of bodyweight of all land-based mammals.
  2. Cows may consume 30 – 50% of their daily water intake within one hour of milking.
  3. Reported rates of water intake vary from about 4 to 16 litres per minute
  4. Lactating cows need 5 litres of water per kg of dry matter consumed + another 1 litre of water per litre of milk produced + more during hot weather
  5. Cows prefer water between 15OC and 20OC.
  6. The amount of water in a cow varies from 56% of body weight in dry cows to 81% in lactating cows.
  7. Water that’s high in cations can cause milk fever in calving cows
  8. High iron, manganese, or molybdenum content may increase needs for copper, or result in more iron-bacteria problems
  9. Water intake varies markedly between individual cows, and from day to day. Here’s the water consumption of eight cows: WaterConsumption

All these facts come from a Advanced Nutrition in Action course run by Dairy Australia. Only just started and I’m already sucked in by all the fascinating stuff there is to know about feeding cows!

 

5 weird and a little bit gross facts about a cow’s stomachs

Lots of people know that cows digest grass using four different chambers rather than a single stomach but here are some (warning: many of them are a bit gross) weird facts you might not have heard:

  1. A cow can produce up to a litre of gas (CO2 and methane) per minute. She’s not a farter though, she’s a burper!
  2. A cow can produce 150 litres or more of saliva in a day.
  3. The first two chambers – the reticulum and rumen – can hold a whopping 150 to 200 litres of solids and liquid in total.
  4. Actually, we’re not really feeding the cow but the bacteria and protozoa in her rumen, which use fermentation to digest 70–80% of the digestible dry matter in the rumen.
  5. The rumen has a pH of about 6 or 7, so isn’t a true stomach. It’s not until the feed reaches the fourth chamber, the abomasum, that the pH drops to 2 and acid digestion begins. This is the cow’s true stomach.