It comes as no surprise to the farmers who sit at the start of Australia's perishable agricultural goods (PAG) supply chain that the ACCC report into the retail sector's behaviours has uncovered unconscionable behaviours by the retailers dealing either directly with growers or via processors.
While not the direct reason for this report, COVID-19 restrictions to trade and border closures have put a significant spotlight on the importance of maintaining our domestic supply of perishable goods.
COVID has also highlighted the power concentration that we have allowed to develop in Australia, whereby we are limited by the small number of processors and retailers who dictate the terms by which our PAG farmers must operate.
The extensive report reviews each industry market and supply chain identified in the submissions and addresses the individual and systemic complaints raised during the consultation period.
The report gives four main recommendations:
- The business-to-business unfair contract terms framework should be strengthened in the ways agreed to by the Legislative and Governance Forum on Consumer Affairs.
- An economy-wide prohibition on unfair trading practices should be introduced into the Australian Competition Law.
- The Food and Grocery Code should be strengthened, including by making it mandatory for retailers and wholesalers, and by introducing significant penalties for contraventions
- Governments and industries should explore measures to increase price transparency in PAG industries, in order to increase competition in those industries
The most telling recommendation in the report is the move from a self-regulated Food and Grocery Code to a mandatory code with power to impose significant penalties on retailers that do not conform.
As we have seen in the early days of the Mandatory Dairy Code, processors and retailers will continue to push the limits of regulations to seek their own profitable advantage. The supply chain must be monitored and penalised through government to ensure fairness and profitability for all.
I was heartened by the number of PAG industry groups that submitted significant and clearly damning evidence about the unfavourable bargaining position of farmers.
I was pleased for my colleagues in both chicken meat and horticulture whose submissions demonstrated a number of examples of unfair contract terms. The ACCC will extend its review into these two industries and will review any breaches to the industry codes that were detailed in submissions.
I would like to extend our thanks to the ACCC for this important review and I look forward to seeing the recommendations made here, being implemented early in 2021.
