In grower consultations, Australia's competition watchdog did not find anyone who was happy with the existing Horticulture Code of Conduct. 

The absence of meaningful penalties and concerns about retribution have held back Australian fruit and vegetable farmers from making complaints about their dealings with wholesalers.

This is what the Australian Competition and Consumer Commission (ACCC) heard in workshops held with growers around the country between June and September this year, in a bid to improve the code that governs transactions in the AUD$8.7 billion (US$6.6 billion) industry.

"Under the Code, growers and wholesalers may only trade with each other if they have entered into a written agreement known as a Horticulture Produce Agreement (HPA)," the ACCC said in its recently published report 'Perspectives in horticulture and viticulture'.

"Despite this requirement, it was noted during the workshops that transactions regularly occur without the existence of a HPA.

"Feedback from growers and grower representatives across the country suggested non-compliance with the Code is so common that growers do not consider it worthwhile to report a breach of the Code."

Common cases included complaints of payments running three or four months after delivery, or sometimes not at all.

During the consultations, wholesalers said these cases accounted for a very small proportion of the total transactions, and also complained the code was a regulatory burden that was imposed on them but not on processors, exporters or retailers.

Wholesalers told the ACCC very few complaints had been raised through the existing formal resolution mechanisms, but growers indicated industry reputations may have something to do with that.

"The growers the ACCC spoke to indicated they were hesitant to raise complaints for fear of damaging their relationship with the wholesaler or a reluctance to be seen as a troublemaker in the industry," the report said.

"The ACCC considers that the Horticulture Code is necessary to address imbalances in bargaining power between growers and wholesalers and to increase transparency in central market transactions.

"The ACCC considers the Code has the potential to be effective, but believes the original aims of the Code are not being achieved. The ACCC therefore supports significant changes to the Code."

To make the code less of a toothless tiger, the ACCC has called for allowing penalties and infringement notices when the Code is breached, while also allowing the code to apply to pre-December 2006 contracts; currently, pre-Code contracts are grandfathered which means 80% of horticulture produce sales contracts are not covered by the Code.

The ACCC also highlighted there needed to be a greater distinction between agents and merchants for the purpose of transparency in the Code.

Readers can click here to peruse the report in more detail.

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