New Horticulture Code: tougher penalties, no exemptions

The revised Horticulture Code, which sets out mandatory requirements for traders and agents operating in Australian fresh fruit and vegetable markets, has now come into effect.

The code requires traders and agents to provide clear documentation of their general trading terms and to have written agreements in place with their farmer clients, to avoid much of the commercial uncertainty that previously existed in these markets.

The revised code also removes the provision in the existing code that exempted all pre-existing trading agreements, and which meant it did not apply to the majority of trade occurring in the sector.

“Farmers producing fruit and vegetables will be given increased protection under the Horticulture Code as it improves competition and commercial practices in fresh fruit and vegetable markets in Australia,” ACCC Commissioner Mick Keogh said.

“From 1 April 2018, the code will apply to all transactions between farmers and agents or merchants, regardless of when any trading agreement was put in place. This is a real win for farmers,” Keogh said.

The changes provide the Australian Competition and Consumer Commission with new powers to issue infringement notices of $9000 for businesses and $1800 for individuals, and seek penalties of up to $54,000 in court for breaches of certain code provisions.

“Infringement notices will allow the ACCC to quickly deal with conduct it believes breaches the code, while tougher court penalties should provide a stronger deterrent than was the case under the current code,” Keogh said.

Keogh said an important and welcome new addition to the code requires negotiating parties to act in good faith, or face potential fines.

“Farmers deserve fairness and honesty from their trading partners and the good faith requirement will help ensure they aren’t subjected to illegitimate business conduct,” Keogh said.

“The good faith requirement will also bring the Horticulture Code into line with the Food and Grocery and Franchising codes, which have similar provisions.”

There is a 12-month transition period to allow the industry time to adapt their existing arrangements to the new code. By 1 April 2018, all existing agreements between farmers and agents/wholesalers must be compliant with the new code. However, any agreement made or renewed after 1 April 2017 must be compliant with the code immediately.

The obligation to act in good faith, along with record-keeping and dispute resolution obligations will also apply immediately from 1 April 2017.