Will the Food and Grocery Prescribed Industry Code of Conduct make a difference?

Coles, Woolworths and the Australian Food and Grocery Council (AFGC) have agreed on a ‘Food and Grocery Prescribed Industry Code of Conduct’ which is supposed to give suppliers a “fairer go”, according to AFGC CEO Gary Dawson. But will it?

Metcash/IGA and Costco have elected not to participate in the voluntary agreement so there are already cracks evident, but the mere fact that the big two supermarket chains came to the table is encouraging.

The purpose of this code is:

• to help to regulate standards of business conduct in the food and grocery supply chain and to build and sustain trust and cooperation throughout that chain;
• to ensure transparency and certainty in commercial transactions in the grocery supply chain and to minimise disputes arising from a lack of certainty in respect of the commercial terms agreed between the parties;
• to provide an effective, fair and equitable dispute resolution process for raising and investigating complaints and resolving disputes arising from the commercial dealings between the parties or otherwise under this code; and
• to enable industry participants to monitor the operation and efficacy of the code in an industry-wide roundtable.

Apparently the code establishes a clear set of principles relating to key aspects of trading relationships between retailers and suppliers and will provide greater certainty and clarity about dealings in the industry without adding complexity or cost in a fast-moving consumer goods sector.

Key aspects of the code include:

• tough restrictions on retrospective and unilateral variations to grocery supply agreements;
• greater transparency on the basis of shelf allocation for branded and private label products;
• recognition of the importance of intellectual property rights and confidentiality in driving innovation and investment in new products; and
• a low-cost and fast-track dispute resolution mechanism.

Once prescribed by the federal government under the Competition and Consumer Act, adherence to the code will be monitored by the ACCC.

To the dismay of many, the code does not address the vexatious matter of shopper discount dockets and independent petrol retailers.

Will this code make life and planning easier for food processors, manufacturers and suppliers? Are there aspects of the code you love? Have the major problem areas been addressed? Please send your feedback either in the comments section below or by email to wnift@westwick-farrow.com.au.

The code can be seen on the AFGC website.