AUSTRALIA - The Australian government is to introduce an unfair contracts law in an effort to protect small businesses from unfair contracts with large businesses, according to UK levy board AHDB Dairy.
This could force milk processors to rethink supply agreements with dairy farmers, although the law will only apply to new contracts developed after 12 November, when the law is expected to come into effect.
Therefore, existing contracts such as the Murray Goulburn and Fonterra contracts that have been at the centre of controversy in recent months will not be covered until such time as they are renewed.
According to the Australian Competition and Consumer Commission (ACCC), there are three dimensions to this law:
- Does the contract contain terms that are not necessary to protect the interests of the big firm?
- If part of a contract was exercised, would this cause a loss to the small business?
- Is there a major imbalance in the rights and responsibilities between the two sides?
Representatives of farmer organisations have outlined that the new law means processors may no longer be in a position to insist that producers supply them exclusively.
Meanwhile, the ACCC has suggested that the number of issues that have arisen in the dairy sector recently, has made it a strong candidate for the next agricultural industry it will review.
TheCattleSite News Desk