Australia’s biggest dairy processor says a mandatory code of conduct for the industry should be managed by dairy industry bodies and the supplier community but is concerned about the cost impact on business operations.
Speaking in Tangambalanga, Vic, the chair of Saputo Dairy, Lino Saputo Jr, said a mandatory code of conduct should also outlaw price downgrades.
“We always believed in the code of conduct, it’s not that we didn’t believe in it,” Mr Saputo said.
“Not knowing how it would be managed or regulated is a bit of a concern to us. We’re not sure what the cost of that will be.
“Listening to the suppliers ... I understood how important that is to suppliers and so there’s got to be a way where that system could be managed from a cost perspective.”
Saputo Dairy backs the 11 points listed in the voluntary code of conduct put forth by the Australian Dairy Industry Council, and believe this code should be mandatory for all processors regardless of size, and wants a provision included that makes price step-downs (and clawbacks) illegal.
“I’m just hoping the mandatory system will not be onerous in terms of a cost structure that impedes us from paying the highest price we can to the suppliers but I believe that it’s the right way to go and I hope that all processors adhere to it,” he said.
Mr Saputo also used his supplier meetings tour to reinforce the company’s plan to standardise its supplier contracts.
“We’ve got to simplify that and that’s part of the code of conduct,” Mr Saputo said.
“There needs to be simplification, there’s got to be more transparency. All these practices of the past really don’t make sense for the future.
“Part of the supplier engagement is we have a committee representing suppliers of the MG pool, suppliers from the Warrnambool pool, as well as our field staff and we’re looking at all the contracts and all the agreements we have. We need to standardise them … we’ve got to simplify them.”