Dairy Produce Regulations (Amendment)

Overview

The Dairy Produce Act 1986 was enacted to manage and regulate the dairy industry in Australia, with a particular focus on providing support to the industry through mechanisms such as the Market Support Fund. This Act was introduced to address the need for a structured approach to supporting dairy exports and ensuring the industry's financial stability. The Act is overseen by the Australian Dairy Corporation (ADC), which has the authority to augment export returns when the estimated average export price falls below a certain percentage of the trend price. The policy objective is to maintain market stability and provide adequate support to dairy farmers and exporters. The Dairy Produce Regulations (Amendment) under this Act aim to refine the support mechanism by introducing a formula to determine the specified percentage required to maintain support levels at various export price scenarios, thus ensuring more consistent and efficient market support.

Scope and Application

The Dairy Produce Regulations (Amendment) Statutory Rules 1999 No. 433, issued under the authority of the Minister for Primary Industries and Energy, amends the existing provisions of the Dairy Produce Act 1986. The regulation applies to the Australian Dairy Corporation (ADC) and pertains to the financial support provided to dairy exporters when the estimated average export price falls below a specified percentage of the trend price. The specified percentage, currently set at 110%, determines the extent of the financial support available to exporters through the Market Support Fund, commonly referred to as 'pot holing'. The regulation's purpose is to introduce a formula that calculates the specified percentage based on the underwritten value of dairy produce and the amount of market support payment, thus ensuring that the support level remains appropriate as market conditions fluctuate. This amendment is designed to provide a more dynamic and responsive support mechanism for the dairy industry without the need for frequent regulatory adjustments. The geographic and jurisdictional reach of the amendment is limited to Australia, applying nationally across all states and territories. The regulation does not explicitly exclude any specific persons, entities, or industries but is targeted at the dairy industry's market support mechanisms. There are no stated exclusions or thresholds within the text of this amendment; however, the application of the formula for determining the specified percentage is subject to the broader parameters and conditions set out in the Dairy Produce Act 1986. The regulation extends the application of the Act by introducing a formula-based approach to setting support percentages, thereby reducing the need for continual amendments to the regulations as market conditions change.

Key Provisions

Section 98 of the Dairy Produce Act 1986 (the Act) outlines the mechanism by which the Australian Dairy Corporation (ADC) can supplement the export return of declared dairy products from the Market Support Fund when the estimated average export price falls below a specified threshold. This mechanism, commonly referred to as 'pot holing', ensures that dairy producers receive a minimum income for their products. The payment is calculated as the difference between the estimated average export price and a specified percentage of the trend price, determined by the Australian Bureau of Agricultural and Resource Economics (ABARE). The specified percentage is set at 110% when the market support level is at its maximum of 30%, but this percentage can be adjusted by regulation. The Dairy Produce Regulations (Amendment) Statutory Rules 1999 No. 433 have been introduced to address the need for a dynamic adjustment mechanism for the specified percentage as the market support level fluctuates. Given that the current level of market support is approximately 20% and is expected to remain below 30%, it is impractical to make frequent regulatory adjustments. To overcome this, a formula has been developed to set the specified percentage based on the underwritten value of the dairy produce and the amount per unit of the market support payment. This formula ensures that the specified percentage remains aligned with the current market support levels. The obligations imposed by the Dairy Produce Regulations (Amendment) primarily fall on the ADC and ABARE. The ADC is responsible for determining the estimated average export price and making payments to dairy producers when the price falls below the specified threshold. The ABARE is tasked with determining the trend price and providing the necessary data to the ADC for calculating the payments. Both entities must adhere to the formula set out in the regulation to ensure that the specified percentage is accurately calculated and applied. The Dairy Produce Act 1986 provides for various penalties and consequences for breaches of its provisions. While the specific penalties for non-compliance with the Dairy Produce Regulations (Amendment) are not detailed in the explanatory statement, it is reasonable to infer that breaches could lead to administrative penalties, fines, or other legal actions. The severity of these consequences would depend on the nature and extent of the breach, and they could potentially include civil or criminal penalties as outlined in the Act. The maximum penalties for breaches are not explicitly stated in the provided text, but they are likely to be in line with the penalties applicable under other sections of the Act.