GRAIN buyer AWB Harvest Finance Pools (AWB) has agreed to change its standard-form grain pool contracts after some of its trading terms were deemed unfair to growers.
The Australian Competition and Consumer Commission (ACCC) said last week AWB had “co-operated” to amend the contract terms after it raised concerns they were unfair.
It said the grain pool contracts originally included terms which potentially gave AWB power to “unilaterally increase fees to growers”, such as administration or management fees, after a contract had been accepted by a grower.
AWB could also potentially introduce new fees for growers as it determined after contracts had been signed and it could reject grain at its “absolute discretion” under previous contracts, the ACCC said.
ACCC deputy chairman Michael Schaper said investigation of AWB’s contract terms followed a wider review of standard-form contracts used in the agriculture sector after new business-to-business unfair contract laws came into effect in November, 2016.
“Most Australian farmers operate as small businesses and often deal with much larger multinational businesses,” Dr Schaper said.
“These amended contracts should provide more certainty and balance to grain trading transactions entered into with growers.”
Dr Schaper said the amendments to AWB’s grain pool contract terms ensured fees for its services will not vary or no new fees be imposed after a contract has been accepted by a grower.
Grain will only be rejected in limited circumstances.
“The ACCC welcomes AWB amending these contract terms and reminds companies that they bear the responsibility of ensuring their standard form contracts comply with the unfair contract terms law,’’ Dr Schaper said.
“If the contracts don’t comply, companies may be subject to investigation and potential enforcement action by the ACCC.
“The ACCC will continue to focus on addressing bargaining power imbalances in agriculture.”
The ACCC was provided with $11.4 million additional funding over four years to establish its agriculture unit to conduct investigations into agricultural supply chains and engagement in rural and regional areas.
It published a report on unfair terms in small business contracts in November 2016 following a review of small business contracts in a range of industries, including agriculture.
Created in the late 1930s as a government-operated single desk to market wheat, the Australian Wheat Board devolved into a grower-owned private company AWB Ltd after grain industry deregulation in 2008.
In 2010 it was acquired for $1.2 billion by Canadian crop services, fertiliser and agrichemicals giant Agrium which a year later sold the AWB trading and grain origination arm and GrainFlow storage and handling business to Cargill Australia Ltd, the local arm of another giant Canadian agribusiness.
AWB has an office in Perth and regional offices in Queensland and New South Wales, but most of its offices and representatives are throughout Victoria and South Australia.
Its harvest finance and grain pool products, in which growers elect to deliver grain into a pool and receive payments at specified intervals during the grain season, are also offered online.
AWB corporate affairs director Peter McBride said that at no time did AWB actually increase or introduce new fees after a grower had entered into a contract, or reject contract grain at its discretion
“AWB has – and continues to – always publish all fees like remuneration earned by AWB, prior to customers contracting,” McBride said.
GrainGrowers policy general manager Dave McKeon said the changes to small business contract laws introduced in 2016 were having a positive tangible impact for grain farmers.
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