Know who you are dealing with

26 October 2017 –

In recent weeks, a number of growers have raised concerns regarding other growers acting as traders, as well as traders operating in regional centres in Australia, who may not be familiar with the need to comply with the Code’s requirements.

What is a trader?

Under the new Code, the term ‘trader’ is a collective term for fresh produce agents and merchants.  A ‘trader’ can be:

  • an agent i.e. a person who sells fruit and vegetables on your behalf for a commission or a fee, or
  • a merchant i.e. a person who buys your fruit and vegetables to resell them.

The only exceptions are where a grower is selling produce directly to:

  • an exporter of fruit and vegetables for export,
  • a retailer for on-sale to consumers (such as a supermarket), or
  • a processor of fresh produce for processing (such as turning tomatoes into sauce).

How do I know if a trader is complying with the law?

Firstly, all traders have to publish and make publicly available a document setting out the general terms on which they are prepared to trade with growers, such as delivery requirements, quality expectations and how and when a grower will be paid.  This is called the trader’s indicative Terms of Trade.

If a grower wants to do business with a trader, then both the trader and grower must agree to a contract called a Horticulture Produce Agreement (HPA).  The HPA will specify if the trader is an agent or merchant.

The documents being issued by Central Markets-based traders have been developed so as to address the requirements of the Code as a standard format agreement, with customisation by each trader to meet their needs.

Under the Code, the HPA must be in writing and it only becomes active when it is accepted by the grower through a written notice, such as an email.

What other paperwork is required?

Keeping records is paramount as a good business practice and the Code encourages this through its requirements.  For example, traders must make a written record of the name of all growers and traders they deal with.  Growers must also make a written record of all traders they deal with.

These records must be kept by traders and growers for six years from the day the record is made.

What happens if the grower or trader refuse to follow the requirements of the Code?

For those who try to trade outside of the Code requirements, the ACCC can seek heavy penalties or issue infringement notices.  When certain sections of the Code are breached, the maximum penalty is up to $63,000.

Such a heavy penalty is expected to provide plenty of incentive to trade within the law and deter people from breaching the Code.

Where can I get more information?

Growers can speak to their Central Market wholesalers who have taken a proactive approach to educating their teams and the growers that they deal with.

You can also find a “How the Horticulture Code helps you” fact sheet at www.accc.gov.au/publications/how-the-horticulture-code-helps-you.