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New fair-trading law needed to enhance Australia’s perishable agricultural markets
AUSTRALIA’S perish- ACCC deputy chair fect farmers’ income, address some of the is-
and Grocery Code, which governs certain conduct by grocery re- tailers and wholesalers in their dealings with suppliers, be made man- datory and include pen- alties for contraventions.
able agricultural goods markets need a new fair-trading law to ad- dress harmful practices arising from bargaining power imbalances that are not covered by cur- rent laws, the ACCC has found.
Mick Keogh said, “The inquiry found that a number of features of perishable agricultural goods supply chains have the potential to cause harm to suppliers and the efficiency of markets more generally.”
and commercial retribu- tion for suppliers who seek a price increase or raise concerns about the conduct of the other party.
sues identified through the inquiry.
The ACCC’s recently released Perishable Ag- ricultural Goods Inquiry Report recommends the introduction of an unfair trading practices prohi- bition, and the strength- ening of the small busi- ness unfair contract term protections and the Food and Grocery Code of Conduct.
“In most perishable ag- ricultural goods markets, there are many farmers, but few processors or wholesalers, and even fewer major retailers.
While submissions to the ACCC included alle- gations of harmful con- duct across all perish- able agricultural indus- tries, the most serious allegations arose in the chicken meat and horti- cultural industries.
These include pro- posals to strengthen Aus- tralia’s small business unfair contract terms law, and the ACCC’s new small business col- lective bargaining class exemption, due to come into effect in early 2021.
The ACCC also rec- ommended that govern- ments and industries should explore measures to increase price trans- parency in perishable agricultural goods in- dustries, in order to in- crease competition.
The inquiry examined markets for perishable agricultural goods, in- cluding meat products, eggs, seafood, dairy products and horticul- tural goods.
“In addition the more perishable a product is the weaker the farmer’s bargaining power often is,” Mr Keogh said.
The report says a lack of price transparency in markets for perishable goods can also weaken bargaining power.
The ACCC has there- fore recommended the introduction of an econ- omy-wide unfair trading practices prohibition to address conduct that causes significant harm to businesses.
The ACCC analysed the factors that affect the bargaining power of farmers, processors and retailers of perishable agricultural goods, and where this can lead to economic harm.
The ACCC heard a range of allegations about conduct by parties with strong bargaining power relative to their suppliers.
This is particularly the case for farmers, who are typically not in a po- sition to influence the prices they receive for their goods.
“Australian govern- ments and agencies are already discussing a potential prohibition on unfair trading practices, and the findings of our report are further evi- dence that it’s needed,” Mr Keogh said.
While there may be room for improve- ment in some aspects of the Dairy Code, the ACCC considers that it is too early to be rec- ommending substantial changes to the Code.
“This makes farmers particularly vulnerable to issues stemming from limited competition at the wholesale or retail level.
“We will investigate potential unfair contract terms in the chicken meat industry following this inquiry, as well as reports that some horti- cultural wholesalers are trading in breach of the Horticulture Code,” Mr Keogh said.
However, the ACCC considers that these up- coming changes will not be enough to address all the significantly harmful practices identified in the inquiry.
The inquiry found that the introduction of the mandatory Dairy Code has increased transpar- ency of prices and con- tracting arrangements, and reduced barriers to farmers switching be- tween processors, which encourages competition.
Allegations listed in the report include unilat- eral variations of supply terms which greatly af-
“The effects of im- balances in bargaining power can weaken con- fidence in markets, re- duce incentives to invest, and result in slower pro- ductivity growth,” Mr Keogh said.
Bargaining power im- balances are also present at the wholesale level of the supply chains of perishable agricultural goods, and processors and wholesalers exist in a highly contested tough bargaining environment, according to the report.
The ACCC received over 80 submissions to the inquiry, more than half of which were sub- ject to confidentiality claims.
The report said that certain reforms already being considered would
The ACCC has recom- mended that the Food
Submissions were re- ceived from participants and representatives across many perishable goods markets and from different levels of the supply chain.
Australians care where their food comes from
RESEARCH from the National Farmers Feder- ation shows that almost one quarter of Austral- ians said that COVID-19 had made them more conscious of where their food comes from.
The increased interest was greatest in older Aus- tralians, with 1 in 3 over 55 reporting to now think more about the origins of their food.
NFF president and Liverpool Plains farmer Fiona Simson said panic buying and temporary su- permarket shortages had caused angst for many Australians.
Females were also more likely to be more con- scious of the source of their groceries at 31 per- cent, compared to men at 24 percent.
“It is logical that Aus- tralians have taken a greater interest in the origin of their meat, dairy, eggs, bread, fruit, vegetables and more,” Ms Simson said.
National Agriculture Day celebrates the plen- tiful, quality, safe and sus- tainable food and natural fibres grown in Australia and the farmers behind it.
“Inquiring consumers will have been pleasantly surprised to find that up to 96 percent of the food on their supermarket shelves is home grown.
“Importantly, AgDay is also an opportunity for farmers to have an on- going conversation with consumers about how and where our food comes from,” Ms Simson said.
“All Australians should take comfort in the fact that Australia is one of the most food secure nations in the world.
“Supply chain disrup- tions and a return to home cooking brought Austral- ians back to basics and in effect, closer to farmers.
“Every year we produce up to two thirds more food than we can consume at home.”
“A deeper connection and understanding between farmers and consumers are essential to NFF’s goal for agriculture to be Austral- ia’s most trusted industry by 2030.”
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Page 16 – Australian Pork Newspaper, January 2021
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