Wholesaler admits breaching Hort Code of Conduct

22 Sep, 2016 10:00 AM
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A VICTORIAN wholesaler has admitted to breaching the Horticulture Code of Conduct.

Melbourne-based fruit and vegetable wholesaler, Young Sang & Co, is undertaking corrective measures after trading in horticulture produce with a number of Queensland-based growers last year without horticulture produce agreements (HPAs).

It also failed to prepare or make publicly available a document setting out the general terms and conditions under which it would trade with growers.

The Australian Competition and Consumer Commission (ACCC) accepted a court enforceable undertaking from the company.

The undertaking comes as the federal government conducts a review of the Horticulture Code.

The mandatory industry code was introduced in 2007 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.

But an independent review released in February this year recommended significant changes to the code.

ACCC deputy chair Dr Michael Schaper said 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.

“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," Dr Schaper said.

"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.

Additionally, the undertaking requires Young Sang to implement and regularly review a Horticulture Code of Conduct compliance program.

Although the undertaking involves its wholesaler arm, Young Sang is also a vegetable grower.

Last year the company opened the first stage of its 4.3 hectare greenhouse development in Bundaberg which produces capsicums, Roma tomatoes, petite capsicums and special snacking varieties of tomatoes.

The facility is part of Young Sang's farming division, United Wholesalers and Growers (UWG), with the crops grown in the facility coming under the Brella Fields brand.

The ACCC's announcement of the breach attracted comment from both Fresh State, the member organisation representing the interests of Melbourne wholesalers, and from wholesale markets representative group, Fresh Markets Australia (FMA).

FMA executive director Andrew Young said in light of the breach, the organisation was strongly supportive of the use of documented terms of trade but noted it is a responsibility of both growers and wholesalers.

“The task of promoting compliance has been made very difficult because of the unworkable requirements of the code,” Mr Young said.

“On that basis, it is perhaps very unfair for the Australian Competition and Consumer Commission (ACCC) to pursue compliance requirements against a trader (wholesaler), if they are not going to seek those same undertakings from grower.”

Fresh State president Shane Schnitzler said the Young Sang findings should not tarnish the whole industry.

"Fresh State are pleased that Young Sang have worked cooperatively with the ACCC and are rectifying any breaches made under the Horticulture Code of Conduct," Mr Schnitzler said.

"Young Sang are a reputable business running a national vertically integrated operation and sought to fix the breach as soon possible.

"The vast majority of wholesalers within the Melbourne Market do comply with base level commercial requirements pursuant to the Horticulture Code of Conduct and Fresh State regularly remind all wholesalers of the need to ensure that this is the case."

A spokesperson from the Victorian Farmers Federation said the organisation would not be commenting as it was a private matter.

Growcom chief advocate Rachel MacKenzie said her organisation was pleased to see the code enforced but it highlighted the lack of true penalties which Growcom hopes to see remedied in the new code as per the reviewer's recommendation.

Mr Schnitzler said breaches of the code do occur from time to time from all parties, not just wholesalers.

"Fresh State inform and educate the market community as much as possible but at the end of the day it is up to individual businesses to ensure their processes are up to date," he said.

"Unfortunately the code in its current format is not a workable or fair document for commercial enterprise which makes it difficult."

Mr Young echoed similar comments.

“The government’s response to the current review of the Horticulture Code of Conduct must recognise the prior comments of the Centre for International Economics that the Code imposes a one-size-fits-all approach to address problems with transactions which comprise less than five per cent of total sales of domestically produced fruit and vegetables,” he said.

“The Federal Government must not repeat the grave mistake of a decade ago, implementing a new Code which is not supported by industry and remains unworkable.”

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FarmOnline

Ashley Walmsley

is the editor of Good Fruit and Vegetables.

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