Regulatory Compliance
Dairy Code
The Competition and Consumer (Industry Codes—Dairy) Regulations 2019 (Cth) (“the Dairy Code”) regulates the relationship between farmers and processors in the dairy industry. The Dairy Code came into effect on 1 January 2020, however has a twelve month transition period in certain circumstances.
The aims of the Dairy Code are to improve transparency in the dairy industry, create certainty for processors and farmers alike in their contractual relationships and set minimum standards of conduct for all parties.
The Dairy Code places a number of obligations on processors and farmers, including in relation to:
1. dealing in good faith;
2. having written MSAs which are Dairy Code compliant;
3. processors being required to publish standard forms of MSAs on their websites; and
4. reporting and record keeping obligations.
Is the Dairy Code applicable to my situation?
A ‘farmer’ is defined as any person (or corporation) that produces, or may produce, milk.
A ‘processor’ is defined as any corporation that purchases, or may purchase, milk from farmers, whether or not that corporation processes the milk. This extended definition of the term ‘processor’ ensures that the mandatory code also covers those cooperatives and milk brokers who purchase milk, but do not process it.
Small business entities exempt
The Dairy Code does not apply to processors who are ‘small business entities’, save that the small business entity is required to comply with the obligation to deal in good faith.
A processor is a small business entity for a financial year if it:
1. is a sole trader, partnership, company or trust;
2. operates a business for all or part of an income year; and
3. has an aggregate turnover of less than $10 million for that income year.
Does the Dairy Code mandate what must be included in an MSA?
The Dairy Code sets out mandatory content for an MSA. An MSA may include other terms, in addition to those required by the Dairy Code, provided that these provisions are lawful and not inconsistent with the Dairy Code.
From 1 January 2020 (or later, if the transition period applies), MSAs signed between processors and farmers must provide for matters including but not limited to:
1. the supply period, including a definite end date (except in the case of MSAs between cooperatives and their farmer members);
2. minimum milk price;
3. requirements in relation to quality and quantity of milk (including testing procedures and volume accuracy assurances);
4. ownership of the milk;
5. circumstances in which either or both parties can vary or terminate the MSA; and
6. the dispute resolution process, which must not be inconsistent with the Dairy Code dispute resolution process.
The MSA must be in plain English, consist of a single document and allow for a cooling off period of 14 days. It cannot provide for both exclusive supply and a maximum volume / tiered pricing. The Dairy Code also restricts the circumstances in which a processor can unilaterally vary or terminate the MSA.
As such, it is important that processors seek legal assistance to prepare or vary an MSA, to ensure that they are in compliance with their obligations under the Dairy Code.
Our agribusiness team is experienced in providing advice and drafting and reviewing MSAs, to ensure that all obligations under the Diary Code are met.
What is the good faith requirement?
Processors and farmers must at all times deal in food faith in relation to the supply of milk. This includes negotiating or entering into an MSA, exercising rights or performing obligations under the MSA, varying or terminating the MSA and dealing with complaints.
The Dairy Code does not set out what it means to deal in good faith, however does set out was is to be taken into account in determining whether a party acted in good faith. Some of these matters included:
1. whether the party acted honestly;
2. whether the party have acted arbitrarily, capriciously, unreasonably, recklessly, with ulterior motives or in retribution for past complaints or disputes;
3. whether the party tried to cooperate to achieve the purposes of the MSA;
4. whether the party has denied the other party a benefit of the MSA; or
5. whether the party has observed confidentiality requirements in relation to resolving a dispute or complaint.
Are there penalties for a breach of the Dairy Code provisions?
A breach of some of the provisions of the Dairy Code can result in a penalty. Penalties for a breach of the Dairy Code range from between $22,200.00 (for farmers) to $66,600.00 (for processors).
The ACCC is responsible for investigation of breaches and enforcement of the Dairy Code.
How can Coulter Legal help?
Whether you are a processor or a farmer, you should take the time to ensure you clearly understand your rights and obligations under the Dairy Code and seek legal advice where required.
Coulter Legal can assist both processors and farmers to understand and comply with their rights and obligations under the Dairy Code, to ensure that the both parties can get back to the business sooner.
Pastoral Award
What is the Pastoral Award?
The Pastoral Award (“the Award”) covers employers and employees in the pastoral industry throughout Australia to the exclusion of all other modern awards.
Modern awards set down the minimum pay and conditions an employee is entitled to in a particular industry. The awards are set down and regularly reviewed by the Fair Work Commission.
The Award covers matters including:
1. minimum pay for employees;
2. expense related allowances, including overtime food allowances, use of vehicle allowances and tool and equipment allowances;
3. protective clothing allowances;
4. leave entitlements; and
5. requests for flexible work arrangements; and
6. specific work requirements for different categories of employees covered by the award, for example shearers and wool classers.
Am I covered by the Pastoral Award?
All employees in the pastoral industry are covered by the Award, excluding those who are covered by an enterprise agreement or where the employee earns over the high income threshold amount, which is currently $153,600.00.
“Pastoral industry” means employers and employees who are engaged in or in connection with:
1. the management, breeding, rearing or grazing of livestock or poultry;
2. the shearing and crutching of sheep and the classing and pressing of wool on farms;
3. dairying;
4. hatchery work;
5. the sowing, raising or harvesting of broadacre field crops and other crops grown as part of a broadacre mixed farming enterprise;
6. the treatment of land for any of these purposes; or
7. clearing, fencing, well sinking, dam sinking or trenching on such farms or properties except in connection with work as detailed above.
The Award does not cover employers or employees in the following industries:
8. the wine industry;
9. silviculture and afforestation except where carried on as a part of a broadacre mixed farming enterprise;
10.sugar farming or sugar cane growing, sugar milling, sugar refining, sugar distilleries and/or sugar terminals;
11. the horticulture industry (which is defined as the Horticulture Award 2010); or
12. broadly work in connection with fish, aqua culture and marine products.
These industries are covered by other modern awards.
How can Coulter Legal assist me?
The Award can be complex to navigate for employers and employees alike. Our specialised lawyers understand the often complex employment relationships that exist within the agricultural industry and the seasonal nature of the work undertaken can lead to uncertainty as to what is required from both sides of the relationship.
For employers, we can help you understand your obligations to your employees and assist you to meet these obligations so you do not find yourself in a dispute about pay or conditions at a later time. For employees, if you are concerned you are not receiving your minimum entitlements under the Award, we can assist by reviewing your circumstances and providing you with advice as to your rights and obligations.
Disputes about Award entitlements often referred at an early stage to the Fair Work Commission. The Fair Work Commission process can be lengthy and expensive for both parties. Getting quality legal advice early can assist in achieving a swift resolution of any dispute under the Award and ensuring that an employment relationship can continue in the future.
Water Act
The take and use of water is mostly governed by state legislation.
Water allocations are essential for sustainable water management. Consequently most state laws have various provisions relating to water supply agreements, water share agreements, water licences, water allocations and the use of water for farming purposes.
Some state legislation sets out certain offences to which penalties can be imposed if water is taken or used in a manner that does not accord with the relevant legislation. In most cases, an offending party will receive an infringement notice from the relevant water authority detailing the breach.
How can Coulter Legal assist?
Contact a member of our Agribusiness team today if you require assistance with any matters relating to the take and use of water and whether or not your current use will comply with relevant State and Commonwealth water legislation.
Occupational Health and Safety
All Victorian businesses are regulated by Occupational Health and Safety (OH&S) law, and the consequences for non-compliance are serious, including significant monetary penalties and, in some cases, imprisonment. Agriculture and farming businesses are no different. Under the current OH&S laws, the business and individuals (such as directors, occupiers who have the management or control, managers and employees) are jointly and severally liable for contraventions of their respective OH&S obligations.
To reduce the risk of any breaches of the OH&S laws, it is imperative that businesses tick all the boxes to ensure the health and safety of all persons in the workplace. Establishing safe work procedures, implementing workplace and safety policies and educating and training staff, are examples of preventative measures to manage and control risks and to minimise the risk of workplace injury.
Prevention is critical. We regularly advise and assist businesses in various industries regarding these obligations and the necessary steps to ensure the businesses’ compliance with the OH&S laws by preventing or reducing health and safety risks in the workplace.
How can Coulter Legal Help?
OH&S regulators inquire, investigate and prosecute businesses for breaches of OH&S law. When these situations arise, it is important to seek professional advice and representation to better achieve a fair, just and reasonable outcome.
Workplace Relations Regulatory Agencies/Bodies
The Australian national workplace relations system regulates minimum wages, award entitlements and minimum terms and conditions of employment. The key national regulators under the current regime are the Fair Work Commission and the Fair Work Ombudsman. The Fair Work Ombudsman is a Commonwealth government agency that is empowered to monitor and enforce employers’ compliance with the Australian workplace relations laws. It may, on its own initiative or in response to a complaint, investigate and take further actions, including for example, commencing prosecution against a business by initiating court proceedings if serious breaches are found.
In Victoria, the Wage Inspectorate Victoria has a particular focus on child employment, long service leave and independent contractors in the transport and forestry sectors.
The principal judicial body regulating the Australian national workplace system is the Federal Court. Other judicial bodies include the Federal Circuit Court, the Australian Human Rights Commission and the State and Territories equal opportunities tribunals (for example, in Victoria, the Victorian Equal Opportunity and Human Rights Commission).
Handling and responding to inquiries or investigations undertaken by the regulatory bodies and litigation in court proceedings require careful analysis and consideration because the financial and reputational consequences can be significant.
How can Coulter Legal Help?
Our experience with responding to these regulatory matters best positions you do ensure these issues are resolved early without risking your business.
Environmental breaches and contamination
Who is the EPA?
The Environmental Protection Authority is responsible for protecting water and air quality at a state and territory level. The EPA is also responsible for protecting land from contamination as well as controlling waste, noise and radiation.
Each state and territory has its own EPA body who operate under and administer separate state based legislation. Each respective state EPA Act governs and provides mechanisms for the following (amongst others):
- works approvals;
- Regulatory compliance and breaches to the EPA act;
- EPA licences (permits);
- research development and demonstration approvals;
- pollution abatement notices;
- clean up notices;
- waste transport permits and certificates.
What are the consequences of breaching the EPA?
A breach can result in criminal and civil penalties where persons are found guilty of conduct. Such offences are usually brought about via receiving a notice from the relevant state Environmental Protection Authority.
I have been served with an EPA Notice, what now?
Our Agribusiness Team are well versed with the Environment Protection Act 1970 (Vic) (“the Act”) and can assist farmers with obtaining works approvals, EPA licences and/or compliance certificates.
We also have significant experience in handling and assisting clients who have been served with EPA clean up notices or are facing disciplinary action from the EPA for an alleged breach of the Act.
How can Coulter Legal assist?
Our Agribusiness team is well versed with the Act and has experience in handling disciplinary proceedings for alleged breaches of the Act.
Taxation (GST and excise tax)
The Australian government levies a number of taxes relevant to the farming and agricultural industry, including excise tax, wine equalisation tax and the goods and services tax (“GST”).
Goods and services tax
GST is a broad based tax which was introduced on 1 July 2020. It is payable by registered businesses on most goods, service and other items sold or consumed in Australia.
You are required to be registered for GST if:
- you operate a business and you have a GST turnover of $75,000.00 or more;
- you operate a not for profit and have a turnover of $150,000 or more per financial year;’
If you do not fall within these categories, your business is not required to be registered for GST.
If you are a small business, being a business with less than $10 million turnover each year, you are able to access certain GST concessions, which include accounting for GST on a cash basis and paying GST by instalments.
What is a GST credit or input tax credit?
If you are registered for GST, you are entitled to claim GST credits (or input tax credit) on items purchased for your business for which you were required to pay GST.
Excise tax
Excise tax is a commodity based tax which is payable on alcohol, tobacco and fuel and petroleum products.
Excise taxes were introduced, in respect of alcohol and tobacco products by the government as a way to reduce the social harm done by tobacco and alcohol. The tax payable on these items is passed through from the manufacturer to the consumer, which raises the prices on these items, which leads to a reduction in consumption.
If you are in Australia and you produce, store or manufacture any of these goods, you may need to pay excise duties.
For alcohol, only beer and ‘spirits or other excisable beverages’ (being alcohol products that are not beer or wine) which are produced, stored or manufactured in Australia are subject to excise tax. Excise tax rates are based on the volume of alcohol in the product produced and indexed twice a year, in accordance with the consumer price index.
For small businesses, you are entitled to access excise concessions which are the same as those GCT concessions available for small businesses.
Wine equalisation tax
Production, storage and manufacture of wine is not subject to excise tax, but is instead subject to the wine equalisation tax. This is an ad volerum tax, which is currently set at 29% of the wholesale value of the wine, as opposed to the excise tax which is based on the volume of alcohol in the product.
Wine equalisation tax is generally only payable if the taxpayer producing the wine is registered or required to be registered for GST.
Depending on your circumstances, there are certain requirements which you must comply with in order to be involved in these industries. You may also be able to obtain rebates or concessions available in relation to excise or wine equalisation taxes payable in a financial year.
How can Coulter Legal assist?
Our team of lawyers can assist you to understand your obligations in relation to GST and excise tax to ensure that you are meeting your taxation obligations to the Australian Taxation Office.
Import/export legislation
Australia’s natural sea borders provide protection against infected or dangerous goods from overseas and the rigorous regulatory environment governing imports and exports is designed to ensure this protection continues.
Importing
There is no minimum amount defined as an import, meaning that anything that is brought into Australia from an overseas location is classified as such. Due to this broad definition there are many issues that must be taken into consideration. Some of the common issues include:
- Costs (such as clearance fees, customs duty and goods and services tax (GST));
- Duties
- Prohibited goods (such as certain chemicals and pesticides); and
- Whether a permit is required
There are also labelling requirements for imported goods, governed by the Commerce (Trade Descriptions) Act 1905 (Cth), which must be considered.
Exporting
Exporting can be a rewarding enterprise for businesses and it is important to have a strategy in place to ensure a successful venture. Part of this strategy will be seeking advice around the regulations for exporting and any potential hurdles or obstacles that may be ahead.
Australia has a long history of natural resource exports including coal, gas, livestock and wool. Today this process is made even easier by online options to facilitate exports and sales. The Department of Agriculture, Water and the Environment controls exports of agriculture products, including:
- Dairy products;
- Eggs and egg products;
- Fish products;
- Live animals;
- Grains and seeds; and
- Plants and plant products.
The broad objective of the legislation is to ensure that the exported commodities meet the importing country’s requirements and are able to be sold.
Exporters should be aware of whether the products they are exporting are defined as prescribed goods. If a business is planning to export prescribed goods, additional considerations must be taken into account. This includes registration of the premises where the prescribed goods are prepared. This can include premises where the following activities occur:
- Capturing or taking of fish;
- Processing, packing or storage of goods;
- Pre-export quarantine or isolation, treatment and testing of livestock; and
- Treatment of goods.
In addition to the above issues, there are controls around specific commodities such as exporting beef, sheep or goat meat, documentation requirements and the requirements of the country you are exporting into that must be considered.
It is therefore essential to the viability of your import or export trade to seek professional legal advice. Being aware of the requirements for your products helps maintain the continuity of your supply chain and your business’s income.
How can Coulter Legal assist?
Coulter Legal can provide assistance at any stage of the importing or exporting process. There is a raft of legislation, including the Biosecurity Act 2015, Importer Food Control Act 1992 and Export Control Act 1982, which regulates importing and exporting. There are also numerous bodies and departments which can be involved in the process. It is therefore important for your business’s supply chain that you seek professional advice to ensure that the regulations relating to your importing or exporting are compliant.
Animal welfare
For farmers, the welfare of their livestock is of utmost importance. A focus on animal welfare in the context of farming produces animals that lead longer and healthies lives, farms can be more profitable and the farming is less damaging to the environment.
There is a vast range of State based legislation and Commonwealth based guidelines relating to farm animal welfare, of which farmers must be aware. What type of livestock farming you are undertaking will determine your compliance requirements.
State legislation
In Australia, with a few exceptions, the states and territories have responsibility for animal and livestock welfare. The relevant legislation in Victoria for animal welfare is the Prevention of Cruelty to Animals Act 1986 (Vic).
The Act provides for a number of codes of practice which provide for acceptable farming practices for the welfare of livestock including cattle, deer, pigs, goats, poultry, sheep, rabbits, captive emus land transport of animals and animals at sale years amongst other things.
These codes provide the minimum standards and practices for keeping these animals. Some of the codes are mandatory, however most are only advisory codes. These codes assist farmer to put practices in place on their own farms which are considered best practice. Furthermore, these codes assist farmers in meeting their legislative obligations.
Farmers may also be subject to others pieces of state and federal legislation related to livestock treatment and welfare, depending upon their farming activities.
Federal standards and guidelines
Despite not having the power to legislate on livestock welfare, the Australian government has developed the Australian Animal Welfare Standards and Guidelines in consultation with industry leaders to help guide the development of nationally consistent policies in relation to animal and livestock welfare. These standards and guidelines provide clarity for farmers and others involved with livestock as to acceptable practices.
The standards and guidelines for cattle, goats and sheep have been developed and the guidelines for poultry are in the process of being developed. These standards and guidelines are unregulated, but are required to be considered in conjunction with legislation and regulations set down by the states.
How can Coulter Legal assist me?
We can help you understand your obligations based on your own individual circumstances.
Where required we can also help you put in places policies or guidelines based on the model standards and guidelines available for use in your own farming operations.
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