ACCC report: Perspectives in Horticulture

In 2016, the ACCC prepared its own report that provided an in-depth examination of competition and fair trading issues within Australia’s horticulture and viticulture sectors. Read the report here: Perspectives in Horticulture and Viticulture 2016

The report delves into the effectiveness of the Horticulture Code of Conduct, introduced to regulate trade relationships between growers and wholesalers, and whether it adequately protects growers’ interests. The report highlighted several critical issues raised by industry, including:

1. the ineffectiveness of the Horticulture Code of Conduct – significant concerns were raised about the current Code by a range of industry participants. The ACCC did not encounter any stakeholders who were happy with the Code in its current form. Feedback from growers and grower representatives across the country suggested noncompliance with the Code is so common that growers do not consider it worthwhile to report a breach of the Code.

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 – imbalance of power between growers and large buyers, particularly major supermarkets, which can lead to practices such as unilateral changes to contracts or delayed payments.

4. Contracting practices – Need for better transparency and pricing practices, particularly concerning the accurate and fair representation of prices in contracts and transactions. 

5. Influence of major retailers – industry participants spoke about the growing influence of major retailers in both industries and noted a trend towards growers dealing directly with major retailers, rather than through wholesale markets. Concerns were also raised by growers and wholesalers in horticulture about retailers including difficulties raising and resolving disputes with retailers and retailers imposing stringent quality standards and being quick to reject produce.

6. Fears about raising complaints – many growers are hesitant to make complaints, both to businesses with greater bargaining power and to regulators such as the ACCC. Growers spoke of threats of being blacklisted or placed on a ‘trading holiday’ (i.e. the wholesaler or retailer ceasing to trade with them either permanently or for a set period).

7. Difficulties in enforcing the Horticulture Code of Conduct due to the complexity of the supply chain and the reluctance of some growers to raise disputes due to fear of losing business. Significantly the effectiveness of the 2007 Code was limited by by the fact that it did not cover agreements entered into before 15 December 2006 resulted in up to 80 per cent of horticulture produce sales contracts not being covered by the Code.

Recommendations include revising the Horticulture Code to address gaps in its effectiveness, enhancing the ACCC’s powers to enforce fair trading practices, and promoting greater transparency in pricing and supply chain practices. The report also underscores the need for industry-wide engagement in developing solutions to these issues, with an emphasis on collaboration between growers, wholesalers, retailers, and regulators.