The National Farmers Federation Horticulture Council says it cannot support the mandatory Food and Grocery Code of Conduct if it is based on the exposure draft released last month. The proposed mandatory code implements the 11 recommendations made in the Emerson review, to start on 1 April 2025.
The revised code has been designed to regulate the conduct of large grocery businesses towards their suppliers. It stipulates:
(a) that large grocery businesses must deal with suppliers lawfully and in good faith;
(b) that certain things must be included in grocery supply agreements;
(c) how grocery supply agreements may be varied;
(d) when payments may be required from suppliers for certain benefits and activities;
(e) how a grocery business must communicate any requirements, standards or quality specifications for grocery products;
(f) protections for suppliers against retribution; and
(g) certain additional protections for suppliers who supply fresh produce.
It also provides for the resolution of disputes. Grocery supply agreements must provide for mediation to resolve disputes between large grocery businesses and suppliers and may provide for arbitration.
A large grocery business must appoint a code mediator to deal with complaints against the business, and to handle disputes between the business and suppliers.
It says that the minister must appoint a code supervisor to review activities undertaken by code mediators and to provide an overview of issues relating to the code.
Large grocery businesses may be liable to a civil penalty for conduct that contravenes the code.
Horticulture Council chair, Jolyon Burnett, said the industry welcomed improvements including making it mandatory, increased penalties, and more accessible dispute resolution processes, but the core concerns of the fresh produce industry “remained ignored”.
The council represents 21 national commodity and state-based horticulture bodies. Burnett said from its first submission to the Emerson inquiry and “every opportunity since”, the council has explained “perishable horticultural products and their domestic retail and wholesale markets must be regulated in a way that is consistent and fit for purpose”.
“Instead of delivering clarity and certainty in trading relationships, the draft code requires supermarkets to take “due care” when telling suppliers how much produce they expect to buy and to be “reasonable” with produce standards and specifications.
“Anyone who has spent a minute in fresh produce will tell you it’ll only be supermarkets that benefit from these vague, subjective, ambiguous terms, that lack any precedents and come with no guidelines,” Burnett said.
Assistant minister for Competition, Charities and Treasury, Dr Andrew Leigh, said the new code will see Aldi, Coles, Woolworths and Metcash subject to multi‑million‑dollar penalties for serious breaches.
“The code increases protections for suppliers by introducing strengthened dispute resolution arrangements, and new obligations to protect suppliers from retribution, which will be complemented by the creation of an anonymous supplier and whistle‑blower complaints pathway through the Australian Competition and Consumer Commission,” Leigh said.
“The amendments to the Competition and Consumer Act 2010 will introduce higher maximum penalties for breaches of the code, as well as higher infringement notice penalties for alleged breaches of the Food and Grocery Code and other industry codes. Legislation will be introduced into the parliament later this year,” he added.
Burnett said, “Elsewhere, protections in the draft code stopping supermarkets shifting risk and cost onto suppliers have been rendered redundant by allowing supermarkets to justify circumventing them by virtue of the gains they stand to make, and not benefits accruing to the supplier alone.
“It runs entirely counter to the intent of the code that benefits accruing to supermarkets could be used to subvert important protections and justify arrangements that, based on impacts on suppliers alone, would be considered unfair and unreasonable,” Burnett said.
