Outlook for dairy properties could improve with collective bargaining advantage

The outlook for the Australian dairy farm market could be improving, with some good news from the Australian Competition and Consumer Commission giving farmers some leverage to bargain with processors for better prices for milk.

In its June report Herron Todd White reported that there had been little to no interest in dairy properties due in part to the fallout of the retailer price wars.

The ACCC has extended the exemption allowing dairy farmers to collectively bargain with processors for a further 10 years.

Australian Dairy Farmers Ltd was first granted authorisation by the ACCC in 2002.

Since that time dairy farmers have formed 18 collective bargaining groups.

These groups represent about 500 farming families.

"This is an important example of how the ACCC can assist small businesses, particularly those in the agricultural sector, to achieve better outcomes in their negotiations with processors," ACCC chairman Rod Sims says.

This is the second time the ACCC has undertaken a comprehensive review of the ADF arrangements.

It is clear from submissions received that collective bargaining by dairy farmers is both supported and well understood by the industry.

The ACCC considers collective bargaining by dairy farmers has the potential to deliver better access to information and resources as well as improved input into contract negotiations.

Collective bargaining can also reduce the transaction costs associated with negotiating supply arrangements for both dairy farmers and processors.

The ACCC may authorise collective bargaining arrangements when it is satisfied that the public benefit from the conduct outweighs any public detriment.

Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.