ACCC rules produce agent broke Code of Conduct

RURAL WEEKLY: A Bundaberg tomato farm.  

Photo: Scottie Simmonds / NewsMail
RURAL WEEKLY: A Bundaberg tomato farm. Photo: Scottie Simmonds / NewsMail Scottie Simmonds BUN220812TOM7

A FARMER has been vindicated after a produce agent with operations in Bundaberg admitted to breaching the Horticulture Code of Conduct.

The Australian Competition and Consumer Commission confirmed Melbourne-based produce agents Young Sang & Co Pty Ltd, which runs a farm and packing facility in Bundaberg, admitted to breaching the Code by failing to provide Horticulture Produce Agreements to any of the growers it dealt with during 2015.

One of those growers was Bowen-based grower Eden Produce Pty Ltd, which took part in a heated mediation process with Young Sang.

Eden Produce owner Loretta Soden filed a claim with the Queensland District Court to try and recover $153,391.90 from Young Sang for mini capsicums - processed in Bundaberg and destined for Woolworths' shelves - that she was contracted to grow for a price originally agreed to "by a handshake".

Conflict arose over Young Sang allegedly lowering the prices it was willing to pay for the capsicums without documentation, citing poor quality produce, and Ms Soden alerted the ACCC.

The ACCC has accepted a court enforceable undertaking from Young Sang for the 2015 breaches, which comprised of "trading in horticulture produce with a number of Queensland-based growers without horticulture produce agreements, or preparing or making publicly available a document setting out the general terms and conditions under which it would trade with growers (terms of trade)".

Young Sang & Co business development manager Daniel Scavo said he believed his company had not been alone in trading without any formal documentation.

Mr Scavo also said the Australian Competition and Consumer Commission had "made an example" of Young Sang.

"We've had very good conversations with the ACCC and we think it has strengthened the way we do business," he said.

"The code is there to protect the grower but realistically there isn't much protection for the merchant.

"I'm quite confident in saying most people don't have the appropriate documentation in place and that can leave you susceptible to breaching the code.

"We've put up a new website with our terms of trade ... and we will be careful who we deal with in future."

The investigation by the ACCC follows a battle by a Bundaberg sweet potato farmer, Ben Prichard, to recover more than $280,000 from Melbourne agents E&R Produce, which has since gone into voluntary administration leaving Mr Prichard with no compensation.

After he spoke out in a special investigation by the NewsMail, the ACCC held a meeting with growers in Bundaberg and now says issues facing the agriculture sector are a high priority for the commission.


ACCC MEETING: Growcom's Rachel Mackenzie, ACCC Agriculture Commissioner Mick Keogh, Bundaberg Fruit and Vegetable Growers' Bree Grima and Ben Prichard of Mr B Fresh in Bundaberg to discuss issues with fair trading. Photo: Eliza Goetze / NewsMail
ACCC MEETING: Growcom's Rachel Mackenzie, ACCC Agriculture Commissioner Mick Keogh, Bundaberg Fruit and Vegetable Growers' Bree Grima and Ben Prichard of Mr B Fresh in Bundaberg to discuss issues with fair trading. Photo: Eliza Goetze / NewsMail Eliza Goetze

"One of the key issues raised by industry participants at the ACCC's recent horticulture and viticulture regional workshops was a lack of clarity and transparency of contract terms," ACCC deputy chair Michael Schaper said.

"It is important that trade arrangements between growers and traders in horticulture produce comply with the Code, and that growers have access to the documents which provides the basis of their business relationship with traders such as wholesalers. This helps to provide certainty for growers about contract terms."

Young Sang has undertaken that it will not engage with growers without HPAs and Terms of Trade, and that it will place a corrective notice on its website for 90 days and send a letter to all the growers it has traded with since 2015 attaching a copy of the undertaking, its Terms of Trade, and a draft HPA where applicable.

The undertaking also requires Young Sang to implement and regularly review a Horticulture Code of Conduct compliance program.

The court battle over the capsicum payments with Eden Produce is still underway.

The Horticulture Code of Conduct is a mandatory industry code implemented in 2007 under the Competition and Consumer Act 2010.

Its purpose, according to the ACCC, is to "improve the clarity and transparency of transactions between growers and traders of horticulture produce, and to provide a fair and impartial dispute resolution process".

A key element is the requirement that traders enter into a written contract (known as a Horticulture Produce Agreement) with the fruit and vegetable growers they deal with.

The code is up for review by the Federal Government in 2017, and farmers including Mr Prichard have canvassed the need for a universal electronic system that would make negotiations between growers and agents clear.

Topics:  accc, capsicum, fruit and vegetable growers, horticulture code of conduct, produce agents

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