Growers seeking to be Code compliant

26 October 2017 –

Following the release of the new Horticulture Code of Conduct earlier this year, an estimated 15,000 growers across Australia will by now have either directly or indirectly received important material highlighting their responsibilities under the Code.

Wholesalers in Australia’s Central Markets have been on the front foot so that they and their growers, are Code compliant.  This has included the development and distribution of standard format documents such as Terms of Trade and Horticulture Produce Agreements (HPAs).

Growers and wholesalers who engage in trade without a grower accepted, Code-compliant, HPA in place risk being in breach of the Code, which could incur hefty fines.

Central Market wholesalers have access to and can supply the necessary code-compliant documentation to their growers, which growers should then review, negotiate and accept prior to sending any produce to wholesalers to meet the grower’s obligations under the Code.

Growers who are yet to receive any documentation relating to the Code should follow up with their wholesalers (traders).

The Market wholesalers’ national representative organisation, Fresh Markets Australia (FMA) is keen to highlight to growers that the HPA required by the Code is effectively a supply contract.  The document details the terms and conditions around the supply of produce, the quality specification of that produce, the acceptance and/or rejection of that produce by the wholesaler (trader), dispute resolution and terms of payment by the wholesaler.

Some grower organisations have promoted a view that once ownership of the produce has passed from a grower to a wholesaler, the grower’s involvement in the transaction is complete.  Whereas, the wholesaling sector’s view reflects standard commercial practice that in circumstances where the produce is not up to specification, or as described, under the terms of the supply contract, the receiver of the product may have a right to return that produce and/or seek a refund or credit for that produce.

The Code requires that a HPA must state the circumstances under which a wholesaler may reject horticulture produce delivered by a grower to ensure both parties are fully aware of the expected quality and quantity specifications.

There are very clear and established commercial principles in relation to the return of produce which is out of grade, is not as it was described, or which contains inherent faults/flaws which may not have been visible at the time of purchase.  If under the terms of a HPA a grower supplies produce and has said that the produce is of a certain standard when it is not, or agreed to supply produce of that standard and does not, there should be appropriate redress for this breach, as there is for the supermarket chains in their trading terms with growers.

This is not an issue which is unique to the fresh produce industry and these commercial principles do commonly apply to other industries.

For more information about the Code, visit the Australian Competition and Consumer Commission’s website https://www.accc.gov.au/business/industry-codes/horticulture-code-of-conduct