Farmers welcome ‘big stick’ changes in grocery code final report

Sheep Central June 24, 2024

Mr Emerson’s review was one of many the Government commissioned to investigate the pricing practices of Australia’s supermarkets, who have been under criticism for their roles in the high inflation the country is currently seeing.

A Senate committee handed down a report into supermarket prices in May and the Australian Competition and Consumer Commission is set to hand down an interim report on its investigation of supermarkets in August, with a final report due next year.

One of the biggest changes has been to make the voluntary Food and Grocery Code of Conduct a mandatory code for supermarkets, including online operators, who have an annual revenue of more than $5b. The same recommendation was made by the Senate committee earlier this year.

Mr Emerson’s review also recommended harsher penalties for supermarkets breaching the code and better protections for suppliers making complaints – including a mechanism allowing for anonymity.

A joint media release from Treasurer Jim Chalmers, agriculture minister Murray Watt and competition, charities and treasury minister Andrew Leigh said:

“This is about getting a fair go for families and a fair go for farmers.

“Our efforts will help to ensure our supermarkets are as competitive as they can be so Australians get the best prices possible.

“We’re cracking down on anti‑competitive behaviour in the supermarkets sector so people get fairer prices at the checkout.”

RMAC raises concerns about mandatory code of conduct

In its submission to the Emerson inquiry, the Red Meat Advisory Council said many red meat suppliers with supermarkets contracts had long-standing relationships – which it believed demonstrated an effective approach to dispute resolution.

“While subject to the vagaries of supply and demand, both domestically and internationally, the red meat industry has a range of marketing options for its products,” the RMAC submission said.

“RMAC is not aware of any credible evidence that suggests there is an imbalance of power with the red meat supply chain.

RMAC said making the code mandatory could fracture some of the long-standing relationships.

“These long-standing relationships highlight the current dispute resolution provisions provide an effective framework to deal with any dispute as needed,” the submission said.

“RMAC has concerns that making the Code mandatory, would compel suppliers to pursue disputes with retailers through litigation, resulting in a protracted and costly process. Due to the cost and likely destruction of the relationship, it is highly unlikely that a supplier would have the resources to pursue a resolution through legal means.”

NFF welcomes crackdown on supermarkets

The National Farmers’ Federation has welcomed the findings of the review. Interim chief executive officer Charlie Thomas said it was good to see mechanisms for suppliers to be able to make complaints.

“This is a significant step in our campaign to level the playing field for farmers,” Mr Thomas explained.

“We’ve always said that to protect growers, we need a code with strong enough deterrents to influence behaviour in the supply chain.”

“These changes should finally give the code the clout it needs to protect farmers.

“It will hopefully mean that farmers can speak up without fear of retribution, and we’ll start to get a clearer picture of the issues at play.”

Mr Thomas said it was disappointing not to see a recommendation to extend coverage of the code beyond supermarkets.

“Throughout the review we raised concerns from the greenlife sector that supplies Bunnings nurseries and argued that relationship should also have been covered by the code.

“We’ll continue to look for ways to better protect those growers in the greenlife sector.”

“Step towards fairness” for farmers and families

A mandatory Food and Grocery Code of Conduct will be a step towards fairness for farmers and families, NSW Farmers said, but added “more work needs to be done”.The final report pf the Food and Grocery Code of Conduct Independent Review by Dr Craig Emerson was published on Monday, with all 11 recommendations being agreed to by the Federal Government.

But while making the code mandatory, significantly increasing penalties for breaches, and providing better support for farmers in disputes with the supermarkets were positive steps, NSW Farmers Horticulture Committee chair Jo Brighenti-Barnard said there was still a long way to go in solving Australia’s supermarket problem.

“We welcome this report which confirms what we’ve been saying all along – there needs to be meaningful competition reform so Australian farmers and families can get a fair go at the checkout,” Ms Brighenti-Barnard said.

“For too long farmers have been afraid to speak out because of the sheer might of these two big supermarkets, so options for independent mediators and arbitrators who can set enforceable actions is a good step, but growers need to be able to use them without fear of retribution.

“It will be critical for farmers to have an active role in drafting this mandatory code so it is practical and fit for purpose.”

Among the findings in the report were enormous penalties for breaches of the code – something NSW Farmers had been seeking – but Ms Brighenti-Barnard said courts rarely imposed the maximum penalty.

“A mandatory code with significant penalties is something we’ve been seeking, and we welcome this, but they need to be a real deterrent, not just a cost of doing business,” she said.

“It’s clear farmers and families are hurting on either side of this supply chain, and it is meaningful competition reform that is needed to deliver results.

“So the Emerson report goes one step, but we also need an economy-wide prohibition on unfair trading practices, proper protection against retribution for farmers who speak out, and an overhaul of the current merger and acquisition approval process.”

We’re getting there, Ms Brighenti-Barnard said, but there was still a long way to go.

“As long as farmers are selling their fresh food for a few cents a kilo and supermarkets are charging families a few dollars a kilo, we’ll all continue to feel the pain,” Ms Brighenti-Barnard said.

“We’re hopeful this is the best step towards the meaningful competition reform we’ve been crying out for.”


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