Monday, July 15, 2024

Government responds to the Food and Grocery Code of Conduct Independent Review

In its response to the comprehensive review of the Food and Grocery Code of Conduct lead by the Hon Dr Craig Emerson, the federal government announced on 24 June 2024 that it will adopt all of Dr Emerson’s 11 recommendations. These changes will see the Code be mandatory with Coles, Woolworths, ALDI and Metcash subject to multi-million-dollar penalties for serious breaches of the Code, including maximum penalties of $10 million or three times the benefit gained from the contravening conduct.

The government will also be creating an anonymous supplier and whistle-blower complaints pathway through the Australian Competition and Consumer Commission (ACCC).

“We will also introduce additional obligations to protect suppliers from retribution by supermarkets.”

The government has directed the ACCC to conduct an inquiry into supermarket pricing, with a final report and recommendations due in February 2025.

“We have also funded CHOICE to conduct quarterly price monitoring reports to provide consumers with more information about where to access the best deals, with the first report out later this month.

“We’ve increased penalties for businesses that abuse their market power and banned unfair contract terms from standard form consumer and small business contracts, and we are consulting on how to address unfair trading practices.”

Woolworths Group response to final Food and Grocery Code Review

“As a founding signatory to the Food and Grocery Code of Conduct, we were pleased to contribute our views to the review,” Woolworths Group said in a statement.

“We note the Federal Government’s response today to the final report’s recommendations, which we are considering in detail.”

“Woolworths Group reiterates its support for the code becoming mandatory and we firmly believe healthy retailer and supplier relationships are key to the continued success of our sector, as well as serving the needs of millions of customers,” the retailer said.

“We welcome the decision to retain fast and cost effective avenues for dispute resolution, for the benefit of suppliers, especially smaller ones.”

A key topic of this review is the supply of fresh fruit and vegetables and Woolworths notes the specific recommendations for this sector in the final report.

“While there is broad support for greater price transparency in the sector, there isn’t yet consensus on how to deliver it.

“As a further step, we are willing to support an industry and government led price transparency initiative to assist on-farm decisions.”

AUSVEG welcomes Government response to Food and Grocery Code Review

AUSVEG welcomes the Australian Government’s commitment to adopt the recommendations of Dr Craig Emerson’s review of the Australian Food and Grocery Code of Conduct.

The peak body for Australia’s vegetable, potato and onion industry is “pleased to see grower calls for the Code to be made mandatory, the introduction of significant penalties for breaches, more independent and confidential complaint, dispute and arbitration mechanisms and an emphasis on addressing fear of commercial retribution embraced in response to Dr Emerson’s review.”

AUSVEG also welcomes the particular focus on the fresh produce category in Dr Emerson’s final report, as well as recommendations to improve the practices and behaviours of supermarket representatives in their dealings with suppliers.

AUSVEG CEO Michael Coote says it was hoped implementation of the report’s recommendations would lead to improved relations between retailers and fresh produce suppliers and help provide growers with greater certainty at a time when the industry is experiencing a cost-of-production crisis.

“Retailer relations with suppliers are complex, and we congratulate Dr Emerson on listening to concerns raised by industry, and by extension the Government for committing to implement the recommendations,” Mr Coote said.

“If implemented effectively, many of these recommendations have the potential to improve business relationships between growers and retailers and may help ensure growers receive fair and sustainable prices for their produce.”

“While the intent of the review to strengthen the Code and address the power imbalance that disadvantages suppliers of fresh produce to big retailers is to be applauded, we note there is some way to go before these recommendations are operational,” he said.

“While we await further details on measures and timings, we also emphasise the importance of government and regulators continuing to consult with industry, to ensure the changes result in material differences to the bottom lines of struggling vegetable farming businesses.”

“Without that material improvement, you will see more and more growers go out of business, which will be bad for the industry, bad for consumers and bad for the country.

“Once the glare of this intense political and public scrutiny on retailer practices that has characterised much of this year subsides, we must have in place workable measures that contribute to the long-term health of a vegetable industry that is key to the long-term health of Australians, and Australia’s food security,” Mr Coote said.

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