Chapter 1



On 17 October 2019, the Senate referred the following matter to the Rural and Regional Affairs and Transport References Committee (the committee) for inquiry and report by the third sitting day in March 2020:
The performance of Australia’s dairy industry and the profitability of Australian dairy farmers since deregulation in 2000, with particular reference to:
the ability of Dairy Australia to act independently and support the best interests of both farmers and processors;
the accuracy of statistical data collected by Dairy Australia and the Australian Bureau of Statistics;
the funding of Dairy Australia and the extent of its consultation and engagement on the expenditure of levies revenue;
the merits of tasking the ACCC to investigate how it can regulate the price of milk per litre paid by processors to dairy farmers to ensure a viable dairy industry;
alternative approaches to supporting a viable dairy sector;
the introduction of a mandatory industry code of practice; and
any related matters.1
On 27 February 2020, the Senate agreed to extend the reporting date for the inquiry to 25 June 2020.2 Pursuant to the order of 23 March 2020, the committee notified the President of the following extensions of the reporting dates:
Date notified
Reporting date
14 May 2020
19 August 20203
20 July 2020
15 September 20204
20 August 2020
12 November 20205
29 September 2020
11 February 20206
5 February 2021
18 March 20217

Conduct of the inquiry

Information about the inquiry was made available on the committee's webpage. The committee also wrote to a number of organisations and stakeholders to invite submissions. Details regarding the inquiry and associated documents are available on the committee's webpage.8
The committee received 36 public submissions. A list of individuals and organisations that made submissions to the inquiry, together with other information authorised for publication, is at Appendix 1.
The committee also held the following public hearings:
Canberra, 5 December 2019;
Canberra, 19 June 2020;
Brisbane, 23 July 2020;
Canberra, 15 September 2020; and
Canberra, 2 March 2021.
A list of witnesses who appeared at these hearings can be found at Appendix 2. The Hansard transcripts of evidence from the hearing can be accessed through the committee's webpage.
In this report, some references to Committee Hansard and the Senate Journals are to proof transcripts. Page numbers may vary between proof and official transcripts.


The committee thanks all individuals and organisations who contributed to this inquiry by making submissions, as well as appearing before the committee to give evidence.

Structure of the report

This report comprises six chapters, including this introductory chapter.
Chapter 2 provides an overview of the dairy industry in the context of deregulation and a discussion of issues facing the current industry.
Chapter 3 considers issues relating to the role, structure, funding and research, development and extension activities of Dairy Australia.
Chapter 4 outlines the provisions of the mandatory dairy code of conduct and issues arising from its introduction in 2020. It also discusses the bargaining power of farmers, processors and supermarkets in the dairy supply chain.
Chapter 5 examines statistical data gathered by Dairy Australia and the Australian Bureau of Statistics.
Chapter 6 considers approaches to support a viable dairy industry into the future.

Context of the inquiry

Current inquiry

The committee's current inquiry was conducted during a period when the Australian dairy industry was contributing to the implementation of a number of key initiatives, including the introduction of the mandatory dairy industry code of conduct from 1 January 2020, and the development of the Australian Dairy Plan (both of which are discussed later in this report).
The Australian dairy industry has also been heavily impacted by the drought, and the devastating bushfires that spread across Australia throughout the summer of 2019–20—particularly in New South Wales and Victoria.
Dairy farmers have suffered from the significant loss of fodder, pasture and cattle, with thousands of cattle dying as a result of the bushfires. The NSW Farmers Association warned of reduced milk supply, due to the combined impacts of the drought, bushfires and power outages (which meant that milk could not be collected). There have been numerous calls for the major retailers to increase the price of milk, in order to better support the dairy industry during such difficult times.9
Conditions improved for dairy farmers in the second half of 2019–20 with higher rainfall, easing input costs and stronger farmgate prices. However, the current impacts on supply chains both locally and globally, due to COVID-19, are substantial.10
It is within the context of the above ongoing matters that the committee conducted its inquiry. The committee further notes that since the inquiry was referred, some of the terms of reference have already been addressed, such as the introduction of a mandatory code of conduct, proposals for subsuming the functions of Dairy Australia into a new industry body under the Australian Dairy Plan and the introduction of a bill empowering the ACCC to determine base milk prices—as detailed below.

Prior inquiries

In the last decade there have been a number of government and industry inquiries into various aspects of the dairy industry. These are listed below.
May 2010: Milking it for all it's worth—competition and pricing in the Australian dairy industry by the Senate Economics References Committee.
November 2011: The impacts of supermarket price decisions on the dairy industry by the Senate Economics References Committee.
January 2013: Horizon 2020 Future scenarios for the Australian Dairy Industry by the peak bodies representing the dairy industry.
July 2014: Australian dairy: prosperous, trusted, world renowned nutrition vision statement by the Australian Dairy Industry Council.
September 2014: Relative Costs of Doing Business in Australia: Dairy Product Manufacturing by the Productivity Commission.
June 2015: Dairy Moving Forward by the peak bodies representing the dairy industry.
August 2017: Australia's dairy industry: rebuilding trust and a fair market for farmers by the Senate Economics References Committee.
April 2018: Dairy Inquiry by the Australian Competition and Consumer Commission.
March 2020: Inquiry into the Saving Australian Dairy Bill 2019 by the Senate Economics Legislation Committee.
November 2020: Perishable agricultural goods inquiry by the Australian Competition and Consumer Commission.

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