ACCC report reinforces concerns over Hort Code failings

ACCC report reinforces concerns over Hort Code failings


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TRADING TERMS: The Australian Competition and Consumer Commission's report into the Horticulture Code of Conduct says there are major failings in the way the Code operates.

TRADING TERMS: The Australian Competition and Consumer Commission's report into the Horticulture Code of Conduct says there are major failings in the way the Code operates.

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The ACCC's report into the Horticulture Code of Conduct reveals a common theme: nobody in the industry is happy with it.

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A "WASTE of space" was how one South Australian grower described the Horticulture Code of Conduct during the Australian Competition and Consumer Commission's (ACCC) regional engagement workshops earlier this year.

A Tasmanian grower representative suggested there had been no genuine change in industry practice since the Code’s introduction, while a New South Wales grower representative said he didn't know a grower that operated with a Horticulture Produce Agreement, something that is required under the code.

The comments came out of the ACCC's report, "Perspectives in horticulture and viticulture – Industry views on competition and fair trading issues", released this week.

The report backed up a 2015 independent review of the Horticulture Code of Conduct which pointed out major failings of the current structure.

The ACCC held a series of engagement workshops around regional Australia to record the opinions of growers and wholesalers involved in the fresh produce supply chain.

The 15-page report identified seven key areas of concern:  

  1. The ineffectiveness of the Horticulture Code of Conduct – Significant concerns were raised about the current Code by a range of industry participants.
  2. Timing of payments to growers – Alleged delayed payments in horticulture and payment structures in viticulture were discussed with the ACCC.
  3. Imbalances in bargaining power – Imbalances in bargaining power exist in both industries and are exacerbated in viticulture by the oversupply of wine grapes.
  4. Contracting practices – The ACCC heard about varied and often informal contracting practices.
  5. The influence of major retailers – Industry participants spoke about the growing influence of major retailers in both industries.
  6. The voluntary Australian Wine Industry Code of Conduct – Concerns were raised about the lack of uptake of the voluntary Code.
  7. Fears about raising complaints – Many growers are hesitant to make complaints due to a fear of being blacklisted or put on a trading holiday.

In a sign of the seriousness of some of the concerns, names of individuals and businesses that provided the ACCC with information were not used in the report.

While much of the feedback was given from growers and grower representatives, the ACCC also spoke to wholesaler groups including Brismark (Queensland Chamber of Fruit and Vegetable Industries Co-operative Ltd), Fresh State (Melbourne) and the Melbourne Market Authority.

There were frustrations vented by the wholesalers, as representatives outlined their frustrations that the Code imposed a regulatory burden on their members that was not imposed on processors and, in particular, retailers.

These representatives further argued penalties should not be available for breaches of the Code as there was no evidence of systemic failure in the market, a definite sticking-point between growers and wholesalers.  

Although it noted the wholesalers' concerns, the ACCC stated in the report it believed the Code should allow for penalties and infringement notices for breaches of the Code.

"Despite the significant negative commentary, many stakeholders expressed positive views about the proposed changes put forward as part of the 2015 independent review of the Code conducted by Mark Napper and Alan Wein," the report said.

"The general view was that these changes could lead to substantial improvements in industry practice, if there is buy-in from both growers and wholesalers."

"The industry is currently awaiting the Government’s response to the independent review of the Code."

ACCC deputy chair Michael Schaper said it was clear the Horticulture Code was not achieving its aims and that significant changes to the Code were required.

“The Code needs to have greater coverage, through the inclusion of pre-2006 agreements, and penalties and infringement notices should be available for breaches of the Code to encourage widespread compliance," Mr Schaper said.

The general view was that these changes could lead to substantial improvements in industry practice, if there is buy-in from both growers and wholesalers. - ACCC report

Ausveg spokesperson Jordan Brooke-Barnett said it was encouraging to see the ACCC continuing to increase its involvement in the horticulture sector.

“We’re hoping to see the Horticulture Code of Conduct benefit from reforms that increase its overall effectiveness and improve its ability to provide protections for growers against unfair behaviour from their trading partners,” Mr Brooke-Barnett said. 

“The ACCC’s report suggests that many growers continue to be concerned by threats of blacklisting or ‘trading holidays’ as retribution for making complaints about unfair treatment.

"It’s clear that there’s more work to be done to protect growers and ensure they feel safe in making complaints.” 

He said Ausveg will continue to push for meaningful whistleblower protections so that industry members affected by unfair trading behaviour are able to make complaints without fear of retribution from their trading partners.

The ACCC's report also looked at the voluntary Australian Wine Industry Code of Conduct.

“There are also a number of contracting and competition issues in the viticulture industry that require further consideration and the ACCC’s Agriculture Unit will be looking at these in greater detail,” ACCC commissioner Mick Keogh said.

The ACCC has been provided with additional funding of $11.4 million over four years to establish an Agriculture Unit that will conduct investigations and engagement in rural and regional areas.

Among its future actions, the ACCC said it would continue to advocate strongly for significant changes to the Horticulture Code of Conduct, as well as work closely with industry to develop and implement an education and compliance program.

It also indicated it would consider allegations of late payments by wholesalers in horticulture and promote the potential benefits of collective bargaining.​ 

  • Find the full ACCC report here
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