4. THE OPERATION OF THE NATIONAL DAIRY FARM ASSURED SCHEME

The scheme will operate as follows:

i. First Purchasers register with the Scheme and pay both the company fee and a fee for each active producer contracted to them. [5.(ii) and (iii)]

ii. Purchasers will make their own arrangements to advise their dairy farmer suppliers about the operation of the Scheme and the standards required. This will be compatible with any general documentation produced by the Scheme.

iii. Purchasers will be responsible for on-farm assessments in accordance with the Scheme requirements. Purchasers will establish the systems necessary to record details and frequency of visits and will make this documentation and all other records related to the Scheme available for approval and audit by the independent auditors appointed by the Scheme.

iv. First purchasers will be responsible for ensuring that farms are visited according to the frequency established by the Scheme rules which at present is at least once every three years. Purchasers must endeavour to time alternate visits to accommodate seasonal management on-farm.

v. Dairy Farmers will be expected to adopt the National Standards in full.

vi. Certificated assessors, on behalf of first purchasers, will visit farms and undertake an on-farm assessment using the approved Checklist. The visits will be pre-arranged so that stockmen and personnel are available with all records, key features and facilities available for observation. This will ensure that the time of all those involved is used efficiently.

vii. Initial visits to participating farms will be completed within three years of the start of the scheme, and thereafter at intervals of not more than 3 years.

viii. Dairy farmers who are non-compliant with any of the "must" criteria [5.(viii)] will have ninety (90) days to rectify the issues. Purchasers will maintain a record of those farms not meeting the standards after the routine assessment visits. Return visits will be arranged as necessary.

ix. Purchasers should put into force procedures to ensure that their active producers comply with the Scheme standards.

x. Failure on the part of a first purchaser to uphold the principles of the Scheme may lead to them being expelled from the Scheme.

xi. An appeals procedure for first purchasers not content with a decision of an auditor is available.

xii. The Board of Directors will produce an annual report on the operation and progress of the Scheme. Once the Scheme is up and running, the National Standards will be reviewed and amended as appropriate by the Board of Directors.