Wholesalers on Alert as ACCC Warns of Horticulture Code Crackdown

Article by: Hari Yellina

A notice has been issued to fresh produce distributors due to violations of the Horticulture Code of Conduct. After audits revealed incidences of wholesalers failing to satisfy their legal duties, the Australian Competition and Consumer Commission (ACCC) says it would focus more on Horticulture Code of Conduct non-compliance reports. After discovering through its Perishable Agricultural Goods Inquiry that some fruit and vegetable distributors were trading without Horticulture Produce Agreements, which is a violation of the code, the ACCC conducted audits. The ACCC said in a statement that it believes the horticultural industry will benefit from additional guidance and that it will issue revised industry recommendations in the coming months.

Following that, the ACCC expects to undertake more audits and will seriously consider pursuing enforcement action if non-compliance is discovered. Growers and distributors must have Horticulture Produce Agreements in place prior to trading with each other. Most wholesalers were found to be in conformity with the provisions to trade under a Horticulture Produce Agreement, but some were erroneously reporting prices in statements to growers and failing to make terms of trade publicly available, according to the ACCC’s audits. Under the Horticulture Code, which went into force in 2018, many wholesalers were needed to document what price they paid growers for food and what price they on-sold it for, according to ACCC deputy chair Mick Keogh.

“Having this information gives growers more price transparency and increases market competition,” Mr Keogh added. “A producer who distributes their produce to a wholesaler may not be able to know what retailers pay for their fruit or vegetables unless they have a compliance statement.” Fresh Markets Australia (FMA) is the national organisation that represents each of Australia’s five market chambers, which represent the fruit and vegetable wholesalers in each of the country’s six key markets (Brisbane, Sydney, Melbourne, Adelaide, Perth and Newcastle).

Over the next two to three months, FMA head Shane Schnitzler said the organization’s state industry bodies will follow up with their members and perform additional re-fresher training in regard to the Horticulture Code’s standards. “Given the upheaval and distractions that business owners have experienced in recent years,” Mr Schnitzler said, “it is opportune and reasonable to have some follow-up at this time.” “The ACCC has not taken any enforcement action against any of the merchants who were randomly audited. “The vast majority of distributors maintain long-term relationships with growers based on mutual respect and trust.

Having a Horticulture Produce Agreement in place is good business practise and is a shared duty of the distributor and producer, ensuring transparency in the trading relationship. According to the ACCC, the code’s mandate that wholesalers make terms of trade publicly available also gives clarity on the trading conditions proposed to growers. “If wholesalers don’t publish their terms of trade, growers are at a disadvantage because they lose the capacity to swiftly and readily compare conditions between wholesalers, reducing market transparency,” Mr Keogh added.