The Australian Food and Grocery Council (AFGC) has described a code of conduct agreement it reached with the country's two main retailers as "historic", but a state farmer group has been critical of the move in the local press.

The voluntary code - signed by the AFGC, Coles and Woolworths - is the result of 14 months of negotiations, and is aimed at bringing "greater certainty and clarity" to trading relationships between retailers and suppliers, without adding complexity or cost.

The code will put "tough restrictions" on retrospective and unilateral variations in grocery supply agreements, and include greater transparency in shelf allocations for branded and private label goods.

The code also entails a "low cost and fast track" dispute resolution mechanism described, and recognition of the importance of intellectual property rights and confidentiality in driving innovation and investment in new products. Website Weeklytimesnow.com.au explained the latter as prohibiting the supermarkets from using suppliers' IP to develop private label products.

Tha AFGC is hopeful the code will be adopted by other retailers and industry groups, and it has been proposed that it will become part of the Competition and Consumer Act.

Victorian Farmers Federation (VFF) president Peter Tuohey told the website there was already a code in place since 2000 that had failed to help farmers and other supermarket suppliers.

"The evidence that voluntary codes fail is reflected in the fact that the Australian Competition and Consumer Commission is investigating 50 supplier complaints against the supermarkets," Tuohey was quoted as saying.

Photo: Woolworths

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