CHANGES to the Horticulture Code of Conduct will force fruit and vegetable growers to take more responsibility for individual contractual arrangements, rather than exacerbate perceptions of a government “beat up” on big retailers, says federal Assistant Agriculture and Water Resources Minister Anne Ruston.
After an independent review of the mandatory code was first announced in mid-2015, and a report handed to the Coalition in November that same year, the government’s response to the investigation is set to be publicly released today.
Of the 13 recommendations made in the final report, two have been rejected by the federal government, while six were accepted in full, two accepted in part, two noted and one accepted in principle.
Senator Ruston said a core recommendation accepted by the government will see the code - that commenced in May 2007 – amended to remove a current exemption for any contracts entered into prior to December 15, 2006.
She said the Coalition decided to review the code after coming into government in 2013 because a situation existed where about 85 per cent of traders and growers weren’t captured by its powers, due to that exemption on pre-existing contracts.
“You had this situation where you had a code that applied to 15pc of the people that it was supposed to cover, rendering it pretty much toothless and unfair on those bound by it,” she said.
“That was the reason for the review and the fundamental recommendation that came back from the review was that we needed to remove that exemption.
“Through a process of negotiation and consultation with growers, traders, merchants and the wholesalers, we’ve got them to agree that it’s a sensible thing to remove that exemption from the code.
“That’s the fundamental centrepiece that needed to be done but while we’re at it, we’ve also made a number of other changes to the code to make it more contemporary, for 2017.”
Senator Ruston said the code would be “re-set” over the next few weeks and regulatory changes proposed, following the government releasing its final response to the independent review.
“We’ll re-write the code, put it out for statutory consultation as per normal processes and once it’s written, it then becomes a disallowable instrument,” she said.
“Consultation with all parties has been a really positive process.
“But when the code was first struck, it was as a result of a concern that there were really bad predatory behaviours by some of the traders.
“What we’ve tried to do now is actually balance that out against making the code make growers take more responsibility for their contractual arrangements as well, so that it’s not just this perception that we’re trying to beat up on the traders and regulate the traders.
“It’s actually turning the code into a useful document so it can provide for better relationships and a better basis for trade arrangements on both sides of the trade - not singling out one side or the other.”
Amendments will also see the Australian Competition and Consumer Commission empowered to impose civil penalties and issue infringement notices for any breaches, after the review raised concerns that a lack of enforcement powers meant the code was unable to deter unacceptable conduct and improper behaviour.
“It certainly struck us that it seemed a little pointless to have a code where there weren’t any penalties for the breaches,” Senator Ruston said.
“But because there weren’t any penalties for breaches, there was a whole series of requirements that the ACCC was able to impose on non-compliant growers or traders that were way more onerous than any fine may have been.”
Senator Ruston said the government also intended to remove other provisions from the code that made it “overly prescriptive” on one party or the other.
She said a number of rules in the code meant the responsibility of one party was required to be taken over by another party.
“As an example, there was a requirement in the old code for traders to be responsible for ensuring growers had actually sought legal advice over their contracts – but to our mind, it’s the growers’ responsibility to seek legal advice,” she said.
“It should not be a breach of the code by the trader, if a grower doesn’t get themselves legal advice.”
Senator Ruston said amendments to the code, following the government’s response to the review, had a two-fold purpose.
She said firstly, it would ensure better measures were implemented to prevent market-power abuse where very large trading entities often dominated growers to the final point of sale, due to limited selling-options, as well as seeking to implement a “set of good business practices” that help smaller horticulture producers.
“Some of our much smaller growers can actually use the code and the templates that exist within it, to get them up to speed on what are good commercial business practices, to protect them in the market place,” she said.
“But it also protects the traders because any contractual arrangement that’s clearly defined provides a process that protects everyone.”
Senator Ruston said sometimes traders, after being supplied horticultural produce, had returned a note to growers saying 50pc of their product had perished and was unable to be sold and then thrown out, so they’d only be paid for half of the supply.
But she said such contractual arrangements would now be “explicitly expressed” in the amended code, so all parties know “exactly what the expectation is”.
“When are they going to be paid; how are they going to be paid; what are they going to be paid for; what the returns policy is - all those sorts of things will be specified,” she said.
“It just sets the ground rules for contracts - the rules of engagement.”
Senator Ruston said amendments to the Horticulture Code would also seek to ensure a gap between it and the Food and Grocery Code of Conduct no longer existed and retailers and growers were adequately covered.