"Grocery Code as first step"
Chief Executive Officer, Alex Livingstone, said that as an ‘opt in’ prescribed code retailers and wholesalers (although only those wholesalers who on-sell to supermarkets) must sign up to the Code before they are bound to it and before its provisions can be enforced by the Australian Competition and Consumer Commission (ACCC).
“We note that Aldi has already signed up and Metcash-IGA will implement the provisions of the code on a trial basis over the next 12 months.
“When Coles and Woolworths sign up to the Code then the most significant retailers in the Australian domestic industry will have been captured.
“However, while this is an important first step, we will maintain our support for a mandatory code as the most effective method of achieving an improvement in the balance of power. This is due to past experience with the longstanding failure of the voluntary Produce and Grocery Code.
“The fruit and vegetable sector is characterised by a large number of small suppliers trading in a highly perishable product. This puts the industry at a unique disadvantage in negotiating fair terms with retailers and these issues are not necessarily addressed by the voluntary Code.
“Implementing a mandatory Code would be consistent with other industry Codes such as the Horticulture Code, so that there could be no accusations of an overly lenient approach to certain components of the supply chain.
“Under the voluntary Code, growers will be required to enter into a written grocery supply agreement with the supermarket or wholesaler (although in the case of wholesalers in the horticulture industry, the mandatory Horticulture Code takes precedence over this Code).
“The general consensus from growers who supply the major retailers about this Code is that while the provisions by and large seem sound on the surface, there are many caveats and opportunities for alternatives to be negotiated. If the fundamental issue centres on a lack of power at the negotiation table, then small suppliers are hardly likely to be able to argue against supply agreements that are not in their favour, voluntary Code or not.
“The dispute resolution process also appears to be mostly internal in the voluntary Code although there is the option to go to a mediator. Growcom is concerned about this as we consider the conditions are vague and suppliers won’t know who to turn to.
“We support a mandatory code with pecuniary penalties. Based on the experience in the United Kingdom on this issue, we consider the appointment of an Ombudsman is absolutely critical to the success of any Code regulating this sector."
Mr Livingstone said that Growcom would consult with growers as to how clauses under the code will work in practice.
For more information:
Alex Livingstone
Growcom
Tel: +61 7 3620 3844