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Dairy company amends contracts over fairness concerns

Dairy company amends contracts over fairness concerns

A major regional dairy company has changed its milk supply contracts after the ACCC raised concerns they were imposing unfair conditions onto farmers.

Victoria-based Warrnambool Cheese and Butter (WCB), which claims to be Australia’s oldest dairy processor having been founded in 1888, had used contracts with farmers allowing it to unilaterally vary milk price and other supply terms.

However, farmers were barred from terminating an agreement early without suffering a financial penalty.

Dairy farmers were also forced to sign up to restrictions on selling their own property.

The clauses are reminiscent of those belonging to South Australian potato wholesaler Mitolo Group, which is the subject of legal action by the ACCC.

However the difference between the two is that WCB will avoid court by taking prompt action to amend its contracts.

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According to the ACCC, the company has committed not to impose contract-break penalties on farmers, narrow the scope of indemnity required by suppliers and not “unreasonably” block consent to the sale of a farm.

WCB has written to farmers to advise them of the changes.

“Unfair contract terms in milk supply agreements have the potential to harm dairy farmers and their businesses,” ACCC Deputy Chair Mick Keogh said.

“WCB has worked with the ACCC to find a solution that balances the farmers’ rights under the milk supply agreements and addresses the ACCC’s concerns about potentially unfair contract terms.”

Located at Allansford on the Great Ocean Road in Victoria, WCB is owned by Canadian dairy giant Saputo Inc.

A business lawyer recently told My Business that all firms should proactively check their supply agreements, terms and conditions and other business-to-business contracts for terms which could be considered unfair to SMEs, given the chaos that can be imposed on larger firms if they are taken to court, and the costs for smaller businesses to comply with unfair and detrimental conditions.

Dairy company amends contracts over fairness concerns
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