Food and Grocery Code of Conduct Review

The Australian Food and Grocery Code of Conduct is a prescribed voluntary code and is prescribed under Competition and Consumer Act 2010. The Competition and Consumer (Industry Codes–Food and Grocery) Regulation 2015 (the Code) was introduced to improve transparency and certainty in the commercial dealings between retailers, wholesalers and suppliers, and provide an effective process for parties to resolve their disputes.

The Australian Food and Grocery Code of Conduct (AFGC) is scheduled to sunset (be automatically repealed) on 1 April 2025. Prior to sunsetting, a review of the Code is also required to determine whether the Code remains fit for purpose.

A review into the dispute resolution provisions (Part 5 of the Code) was conducted earlier this year and the report is now with the Government for consideration. The review of the remaining provisions of the Code was announced on 3 October 2023.

At this point in time a reviewer to undertake the review of the remaining provisions of the Code has not been announced, nor the specifics of the time frame, except it needs to be completed by June 2024.

However, Treasury has advised that the review will undertake two key activities:

1. Assess the effectiveness of the Code provisions in achieving the purpose of the Code to improve the commercial relationship between retailers, wholesalers and suppliers in the grocery sector, and
2. Consider the need for the Code, including whether it should be remade, amended or repealed.

In evaluating the purpose and features of the Code, the review will have particular regard to:

1. The impact of the Code in improving commercial relations between grocery retailers, wholesalers and suppliers,
2. Whether the Code’s provisions should be extended to other retailers or wholesalers operating in the food and grocery sector,
3. Whether the Code should be made mandatory, and
4. Whether the Code should include civil penalty provisions.

AUSVEG will be preparing a submission into the Australian Food and Grocery Code of Conduct Review. In preparation for the review, we are seeking detailed information from the vegetable, potato and onion sector on their experiences dealing with the retailers and how the Food and Grocery Code be modified to ensure a more even playing field. 

Some suggestions already under consideration by AUSVEG for the submission include:

1. Making the AFGC mandatory rather than voluntary.
2. Enable greater equity around the weekly price negotiations for perishable goods
3. Replacing supply agreements with greater contractual certainty, including price.
4. Implementing fines and financial penalties for those businesses or individuals that breach the AFGC, including mechanisms to compensate disadvantaged suppliers.
5. Code Arbiters appointed independent of the retailers.
6. Access to education and training so that the industry better understands the AFGC and therefore level the playing field.
7. Enable mechanisms that require increased transparency and reporting from the retailers.

What can you do?

1. AUSVEG will have two ‘grower only’ webinars as forums to express concerns and provide ideas for improvements to the AFGC. These will be on Friday 1 December at 11am-12pm and on Tuesday 5 December at 4pm-5pm. If you would like to attend one of these webinars please email publicaffairs@ausveg.com.au and you will be sent an invitation (webinar link) to attend. These forums are for growers/suppliers only and members participating will be asked to respect privacy and Chatham House rules will apply.
2. Please write to publicaffairs@ausveg.com.au with any case studies and examples that can be used to back up any changes or modifications to the AFGC. AUSVEG will work with growers to ensure they are comfortable providing sensitive information and how we may be able to de-personalise to ensure anonymity but still maintain the rigour of the information.
3. Provide data or any documents (i.e. emails etc.) as evidence to support changes to the AFGC.

AUSVEG is already collating data from growers in relation to long-term price trends, supply arrangements, margin markups and retailer behaviour complaints. AUSVEG has also engaged commercial lawyers to review current trading supply arrangements and commitments.

Independent Reviewer of the AFGC

As part of a previous review into the AFGC, the Government appointed an Independent Reviewer to review complaints to ensure that suppliers are afforded due process throughout the dispute resolution process.

The Independent Reviewer conducts an annual survey of suppliers and signatories, and releases an annual report which has provided insights into some of the examples of poor conduct by retailers so that they can be addressed before such problems become systemic.

Mr Chris Leptos AO was appointed the Independent Reviewer in 2021 and has recently been reappointed for an additional three years.

Historically, the fresh produce sector has not been very forthcoming with complaints to the Reviewer. AUSVEG strongly urges growers to utilise the facility of the Reviewer.

To raise a complaint with the Independent Reviewer please visit the Grocery Code Reviewer website here.

The Annual Report for 2023 is due for release either later this month or in early December 2023. Previous reports, media releases and other resources can be found here.

Competition economics, policy, and law course – Canberra

A new course from Mandala Executive Education will explore why competition matters, how to measure competition and the different theories of competitive harm, the state of competition in Australia, the politics of competition and an overview of competition institutions, laws and regulations in Australia.

To enrol in the course please register below.

When: 11-12 Dec 2023
Where: Canberra
Course Cost: $2,990 per person

Competition review

In August 2023 the Treasurer announced the Competition Review which will run for two years.

The Competition Review will provide advice to the government on how to improve competition across the economy including topics such as mergers and acquisitions, powers of the ACCC and market concentration.

The Review will look at competition laws, policies and institutions to ensure they remain fit‑for‑purpose for the modern economy, with a focus on reforms that would increase productivity, reduce the cost of living and/or lift wages.

Some of the issues facing growers may not be covered under the AFGC review however could form part of the AUSVEG submission in to the Competition Review.

The Competition Review is a continuous review process. Further information on the Competition Review can be found here.

ACCC – new unfair contract terms laws

The primary responsibilities of the ACCC are to enforce compliance with the Competition and Consumer Act 2010, which incorporates the Australian Consumer Law (ACL). Recent changes to ACL (effective from 9 November) will prohibit the use of unfair contract terms in standard form consumer and small business contract.

The ACL includes protections for consumers and small businesses against unfair contract terms in standard form contracts. A standard form contract is a pre-written contract that a business prepares for all their customers, and the customer can’t change any, or the majority, of the terms of the contract. They can only take it or leave it.

A contract term is unfair if it:

1. Causes a significant imbalance in the rights and obligations of the parties under the contract, and
2. Is not reasonably necessary to protect the legitimate interests of the party advantaged by the term, and
3. Would cause financial or other harm to the other party to the contract if relied upon.

The changes to unfair contract terms apply to:

1. Standard form contracts made or renewed on or after 9 November 2023
2. A term of a contract that is varied or added on or after 9 November 2023.

You can read about more detailed information in relation to the changes here, and download a PDF of practical tips to help with the changes here.

The Farm To Supermarket Food Waste Report 2023

Social enterprise Good & Fugly recently released its The Farm to Supermarket Food Waste Report 2023 which explores the issue of fresh produce waste.

As all growers know the demand for “perfect” fruit and vegetables from retailers is leading to huge food waste, and diminished financial returns.

The report outlines some stark realities about food waste, retailer specifications and how growers are once again carrying the financial burden.

1. Farmers reported that the most common cause for supermarket rejections was appearance (68%), followed by size (37%), ripeness (26%) and pest infestation (9%).
2. 19% of produce rejected by retailers was given away for free, whilst 19% was thrown away.
3. Farmers lose an estimated $30 million a year on rejected deliveries.
4. 39% of farmers reported that commercial buyers have “little empathy for our financial situation” and 30% reported that contracts with commercial buyers didn’t allow any flexibility in response to varying levels of supply and demand.

Two-day Retail Negotiation Skills Workshop

Following the very successful Retail Negotiation Skills Workshop held in Melbourne in September, AUSVEG is collaborating with NextGen to offer similar two-day courses in Queensland, Western Australia, Tasmania and South Australia.

Dates for 2024 are:

1. Brisbane, 13 & 14 February – venue to be confirmed
2. Perth, 18 & 19 March – Venue: Vegetables WA
3. Tasmania, 9 & 10 April – Venue: TFGA, Longford
4. Adelaide, 2 & 3 May – venue to be confirmed

The cost of the course is $1,350 plus GST. See the course outline here. The skills learned in this workshop are transferable to help you in all areas of your sales, including export, wholesale or B2B in food service.

This workshop is an extension on the Retail Negotiation webinar run by AUSVEG in May. If you’d like to attend the workshop but weren’t able to attend that webinar, we recommend you watch the recording here to get an introduction to the topics that will be covered in the workshop.

Don’t miss this great opportunity to learn how to level your playing field.

To express your interest in the courses please email publicaffairs@ausveg.com.au with your name, position, company and contact details. Due to the nature of discussions with the training session the course is not available for retailers or other associated supply chain participants.

For more information, contact AUSVEG National Public Affairs Manager Lucy Gregg at lucy.gregg@ausveg.com.au, or 03 9882 0277.