ACCC Focuses on Horticulture Code Enforcement

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Some fruit and vegetable wholesalers are not meeting their legal obligations under the Horticulture Code of Conduct, recent audits by the ACCC have found.

The ACCC conducted audits after hearing through its Perishable Agricultural Goods Inquiry that some fruit and vegetable wholesalers were trading without Horticulture Produce Agreements, which is a breach of the code. Horticulture Produce Agreements are written contracts that growers and wholesalers must have in place before trading with each other.

They found that some wholesalers are incorrectly reporting prices in their statements to growers. Under the Code, certain wholesalers are required to report what price they paid growers for the produce and what price they on-sold it for. Having this information provides greater price transparency for growers, giving them visibility over what retailers pay for their fruit or vegetables.

They also found some wholesalers were failing to make their terms of trade publicly available. This requirement of the Code provides growers with transparency on the trading conditions proposed, allowing them to quickly and easily compare terms between wholesalers. By not making their terms of trade publicly available wholesalers reduce transparency in the market, placing growers at a disadvantage.

The ACCC’s audits found that most wholesalers are complying with the requirement to trade under a Horticulture Produce Agreement, but identified that some are incorrectly reporting prices in their statements to growers, and failing to make their terms of trade publicly available.

“Under the Horticulture Code, many wholesalers are required to report what price they paid growers for the produce and what price they on-sold it for. Having this information provides greater price transparency for growers and enhances competition in the market,” ACCC Deputy Chair Mick Keogh said.

“Without a compliant statement, a grower who sells their produce to a wholesaler may not be able to see what retailers pay for their fruit or vegetables.”

The code’s requirement for wholesalers to make terms of trade publicly available also provides growers with transparency on the trading conditions proposed.

“Growers are at a disadvantage if wholesalers don’t publish their terms of trade, as they lose the ability to quickly and easily compare terms between wholesalers, which reduces transparency in the market,” Mr Keogh said.

The ACCC believes the horticultural industry would benefit from further guidance and will release updated industry guidance in the coming months. Following this, the ACCC intends to conduct further audits and will strongly consider enforcement action if it identifies non-compliance.



Background

The Horticulture Code is a mandatory industry code prescribed under the Competition and Consumer Act 2010 (CCA). It came into full effect in 2018 and aims to improve the clarity and transparency of trading arrangements between growers and merchants or agents in the horticulture sector.

Section 51ADD of the CCA allows the ACCC to require a corporation to provide information or documents it’s required to keep, generate or publish under an applicable industry code.

Ensuring compliance with mandatory industry codes of conduct in the agriculture sector is an essential enforcement and compliance activity for the ACCC. The audits are an important step in assessing the effectiveness of, and level of compliance with, the Horticulture Code.

For more information see our current Horticulture Code guidance.

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