SPECIAL INVESTIGATION: Bundaberg farmers owed millions by Melbourne produce agents
“IT FEELS like we’ve made a mistake. We feel ashamed. We feel embarrassed.
“But we’ve done nothing wrong. We’ve done the right thing.”
A part of Bundy’s farming community could be on the brink of collapse.
At least eight Bundaberg sweet potato growers say they are owed a combined total of nearly two million dollars by agents they trusted to sell their produce at a market in Melbourne – and now, out of desperation, they have banded together to take action.
“We sent all of our produce all around the country to the capital cities,” Ben Prichard, of Mr B Fresh on Rosedale Rd, explains.
“There are agents who sell that produce on our behalf.
“They never own that produce. They’re like a real estate agent – they get the produce, they sell it on, they take a commission and they’re supposed to pay us the rest.
“That’s not happening. And when it does happen, it’s very delayed, and often not enough.”
The major issue centres on produce sold at the Melbourne Produce Markets.
Mr Prichard’s father and business partner, Mike, has applied to the Federal Court to put LIS Future Developments Pty Ltd, which trades as E&R Produce, into insolvency for ignoring a statutory demand to pay for thousands of pallets of sweet potatoes valued at $283,486.17.
The bills owing mount up twice or even three times weekly from between November 3, 2014, to January 29, 2016.
The Prichards had previously issued a statutory demand for the money to be paid but the two parties could not reach an agreement.
“They (made a deposit of) $20,000, and offered us $5,000 a week, but (E&R director Robert Zakaria) wouldn’t give me a personal guarantee,” Ben Prichard said. “He wouldn’t put his own assets on the line.”
E&R supplies more than 80 fruit and vegetable stores across Melbourne.
“They sell it, the produce is gone, the consumer has taken it home and eaten it – and six months go by, and we haven’t seen the money,” Mr Prichard said.
“It’s like a real estate agent selling your house and putting the money in their account for as long as they want – and then saying ‘Oh, we didn’t sell it for $400,000, we sold it for 300’.”
Mr Prichard and other local growers wonder whether the market’s move in September last year, from Footscray to Epping, have anything to do with their problems. It was likely a costly move.
One of the subjects of the litigation, E&R director Robert Zakaria, has posted pictures on his Facebook account driving a sports car and a speedboat.
Growers have been left out of pocket for a year or more and, Mr Prichard fears, if another month goes by some could go under.
“Cash drained farmers cannot afford to plant their normal yearly crop volumes,” Mr Prichard said.
“Despite the loss of income, farmers have managed to continue to pay their staff and suppliers. Without support we will see farmers go broke, lose their farms and employees lose their jobs.”
The Bundaberg farmers say agents have routinely promised to send payments and failed to deliver – but most are afraid to take legal action for fear that if an agent is shut down, they will lose their chance of ever getting the money they are owed.
Mr Prichard has a further $350,000 tied up with another agent, which he moved onto after cutting his supply to E&R. There is currently no legal action against the other agent.
With nowhere else to send their perishable produce that had been months in the planning, and staff with families to feed, growers have found themselves in a corner, continuing to make deliveries as debts piled up.
Sending their sweet potatoes somewhere else was not so simple an option.
“The market’s saturated. Other agents wouldn’t take us on,” Mr Prichard said.
“It’s difficult to swap because they’ve got existing arrangements.”
The market’s consignment system, used widely at markets across Australia, puts the buying and selling power in agents’ hands and until now, Bundaberg farmers have avoided making a fuss.
“Up until Ben approached us (it hadn’t been spoken about),” one farmer said.
“Farmers will talk about the variety of crops they grow, about a new production line, but the accounts side is different.
“It’s not something you talk about.”
All agree it could be the tip of the iceberg.
“We are a tight knit group and these are just the ones we are aware of. I think we’re just scratching the surface,” Mr Prichard said.
Part of the problem the growers face is a lack of documentation.
The agents rarely sign Horticulture Produce Agreements sent to them, he said, which set out the terms of reporting market sale prices and commissions the agents take.
“They set up their companies in such a way so that when farmers pursue legal action, they have no access to personal assets and fail to recover their money.”
Ben Prichard wants to see national reform to make things fair for farmers.
“I want to see transparency.
“I want to see a single electronic system put in place so we, the growers, at one end can put all our pallets in, we send it to the agent, we’d have an electronic contractual agreement with them.
“As it is now, they’ll send us a contract, we fill it out and send it back, and they never sign it. We’ve never received a signed contract.
“It needs to state the percentage commission on the sale, a guaranteed payment time frame.
“It needs to be nationwide and the market authority needs to get in and have visibility nationwide on all of these transactions to make sure they do the right thing.
“There’s so much risk – we need to get paid.
“We look after our produce for six months. (Agents) have it for three days and make twice as much.”
He has set up a crowdfunding account to help those affected.
“This won’t fully repay the farmers affected, but will relieve some pressure and enable them to continue to operate.”
Melbourne Market Authority and wholesaler industry body Fresh State both declined to comment.
Elvis Haykal and Robert Zakaria, directors and shareholders of E&R Produce, did not return phone calls.
PAYMENT COMES AFTER INVESTIGATION
SEVERAL Bundaberg famers declined to be named for this story.
One of them considered himself “one of the lucky ones” despite being owed $175,000 by another agent.
On the same day investigations were made by the NewsMail, that agent paid the farmer $30,000 towards the debt.
A third farming family owed nearly $800,000 for their potatoes have been told by the same agent they will be paid about $100,000 by the end of the week.
They withdrew supply from their agent in February but are still owed money for 75 consignments.
They say that agent had been “dragging out” their payments for up to 18 months by paying off consignments at random, usually the smallest first.
LOCAL POLLIES WEIGH IN
LOCAL politicians including Bundaberg MP Leanne Donaldson and Hinkler MP Keith Pitt have responded to pleas by citing the role of the Horticulture Code of Conduct and suggesting farmers approach the Horticulture Mediation Advisor.
Farmer Ben Prichard said he didn’t believe mediation would come to anything.
“The code of conduct doesn’t work because it isn’t enforced,” he said.
“If you have no (Horticulture Produce) agreement, how can you successfully negotiate terms when the agent has no obligation to pay?
“If the code was working we wouldn’t be in the position we are in.”
However, Mr Pitt has stepped in to organise a meeting for them to voice their concerns to government. The meeting will take place on July 12.
Mr Pitt said the ACCC would hold the meeting so the producers could directly tell the Agriculture Enforcement and Engagement Unit about the trading issues.
Tim Lawson, Labor candidate for Hinkler in today’s election has weighed in, signalling his support for the growers.
“Coles and Woolworths buy these products from some of these agents.
“I’m sure Coles and Woolworths wouldn’t be happy if they knew that farmers weren’t getting paid. They’ve got a moral obligation to ensure these farmers get paid, and get paid quickly.”