42Penalties for withholding loyalty payments

42 Penalties for withholding loyalty payments

(1) This section applies in relation to a milk supply agreement between a processor and a farmer that provides for a loyalty payment to the farmer. (2) The processor contravenes this subsection if: (a) the agreement is terminated before the end of the agreement’s supply period; and (b) the processor does not pay to the farmer a portion of the loyalty payment, calculated on the basis of the proportion of the supply period completed before the termination, (and any conditions to which the loyalty payment is subject are satisfied, other than conditions prohibited by section 35).

Civil penalty: 300 penalty units.

(3) Subsection (2) does not apply if the milk supply agreement is terminated in circumstances involving a material breach of the agreement by the farmer.