Chapter 4

Views on the Bill in submissions and evidence

4.1        The committee has received submissions and heard evidence on the Bill from producers and their representative bodies, a major retailer and a peak retailer organisation, a regulator and a state government. In the majority of cases their views are sympathetic to the intention of the Bill, but then go on to state that they cannot support the Bill in its present form and outline some significant concerns about its implementation.

4.2        The evidence obtained by the committee consistently raises the following themes:

• it would be very difficult to calculate the producer price, as defined in
  the Bill;
• the Bill will have unintended, adverse effects on producers;
• the producer price may be misleading to consumers;
• it is not certain the problem identified by the Bill exists; and
• if it does exist, the Bill is not the correct response to that problem.

Difficulties with calculating the producer price

4.3        One of the most common themes of the evidence provided to the committee is that it will be difficult, if not impossible, to accurately calculate the producer price, as defined in the Bill. This is raised as a concern even by those parties that support the intention of the Bill.

4.4        At a fundamental level, the committee heard evidence from people at the front line that questioned whether an accurate farm gate price could be calculated. CGSA stated:

CHAIR:  I am just trying to see if it is possible at all to determine a uniform farm gate price when the input costs may well be radically different across every unit of production.

Ms Lowe:  You would not be able to. It is an average instead. Your input costs are going to change seasonally and it is going to change across the region.[1]

4.5        The South Australian Farmers Federation (SAFF) made a similar statement:

CHAIR:  The representatives from the Australian National Retailers Association made the point earlier that the six or eight big companies that are their primary members have got many thousands of outlets around Australia, that they have tens of thousands of suppliers, that a lot of their produce is purchased from packing houses or wholesalers and that there are some direct farmer supplies but not much. They said, and the CEO was quite unequivocal about this, it would be impossible for them to apply the farm gate price to labels in stores because (1) they hardly have any direct relationship with individual farmers and (2) in the various stages from leaving the farm gate to before the product goes into the bin in Coles or Woolworths it is handled by somewhere between four and 14 different groups: cleaners, labellers, packagers or whomever. Is that evidence correct?

Mr White:  I think that is correct. There certainly is that lack of relationship between their suppliers and where they actually get the stuff from.[2]

4.6        Similar views were expressed by Woolworths in its submission to the committee:

...the actual concept of a farm gate price as defined in the proposed Bill simply does not exist. This is because a farmer is not paid for “produce available at the farm” as the Bill requires. The price paid to farmers when they first on-sell their produce will include various levels of value adding that is not separated out from any basic price for harvested produce. For instance, the wholesaler or grower may first undertake activities such as packing, transport, grading and quality control.[3]

4.7        Practical difficulties with calculating the producer price were also identified in submissions and oral evidence. Some relate to the complexities of the fresh produce supply chain (see Chapter 3).

4.8        The AFGC, which supports the intent of the Bill but opposes it for practical reasons, stated:

The food supply chain is complex. Even within the fresh produce categories it is variable in:

1.      length, with some produce sourced locally, but in many cases produce having to cover hundreds if not thousands, of kilometres even within Australia;

2.      the number of parties within the supply chain. Supermarkets may deal with a local producer but frequently produce passes through wholesalers and transport companies;

3.      the storage and handling conditions – produce is seasonal and may require extended storage in controlled conditions protecting it from extremes of temperature and moisture, and from damage from pests (e.g. rodents, insects, moulds etc.). Produce may also need to be specially packaged and/or held for ripening depending on the production area and the distance to market;

4.      availability and quality of produce – the production of horticultural products in many cases is subject to the vagaries of weather affecting both amount and quality of produce. This in turn directly affects the unit cost of production to the producer.

...

Produce sold through major supermarket chains is also subject to tight quality specifications with its integrity and safety assured by advanced quality control systems – all of which add costs.[4]  

4.9        A similar point was made by PMA Australia-New Zealand (a producer trade organisation):

Most produce purchased by the retailers has passed through a number of hands post-harvest and therefore it would require a massively complex audit trail to trace back to the theoretical farm-gate price that has had all costs of transport, processing, storage and marketing and profit margins of all these intermediary entities removed.[5] 

4.10      ANRA, the peak body representing the major supermarket chains, estimated that where retailers deal directly with their suppliers the produce will undergo four procedures or processes before it gets to the retailer. If the retailer uses a wholesaler, this could be as many as 14 different processes.[6]

4.11      The National Farmers' Federation, representing producers, also spoke of the complexity of the supply chain in its evidence to the committee:

CHAIR:  Is it reasonable to have a farm gate price disclosed publicly at point of sale of a particular item of produce that does not have in it all of the costs that are necessarily imposed post the produce leaving the farm gate—that is, the transport costs, the packing costs, the supply chain costs, the cleaning costs, the labelling costs and all that. All those have to go in somewhere or other. Is sending that inaccurate price message to consumers a reasonable thing to do?

Mr McElhone:  Again, you are talking about very different, diverse supply chains. We believe that there are genuine complexities in trying to average out a uniform marketing cost over the farm gate cost, and it would be dangerous to try to oversimplify that process. We are not sitting here trying to deny that retailers do have a significant array of marketing costs involved in the running of their business, so we would need to take those kinds of issues into account when we are trying to build that transparency.[7]

4.12      The nature of the supply chain used by major retailers affects the knowledge they would have of the farm gate price. Woolworths stated:

In the course of our buying arrangements, Woolworths only has visibility of the cost price we pay to our suppliers, not the price paid to the majority of farmers. Woolworths would therefore not be able to report on what farmers are paid for their produce.[8]

4.13      The NSW Farmers' Association, which supports the intent of the Bill, stated:

There is no 'adequate' database of farm gate prices and 'prices are not always simplistic'. Many producers use wholesalers and so do not receive a direct farm gate price, but rather 'a variable percentage of the market price'.[9]

4.14      According to ANRA:

In practice this requirement would mean that large retailers must ‘discover’ the prices that farmers are paid for their produce. This is highly problematic, if not impossible. Large retailers do not currently have direct access to the details of prices that fruit and vegetable farmers receive for their produce. ANRA’s supermarket members typically source fruit and vegetable supplies from a variety of providers; including farmers’ co-operatives, wholesalers and produce markets – where produce is consolidated, graded, packed etc before purchase by retailers.[10]

4.15      The SA Fresh Fruit Growers Association, which supports the Bill, wrote that a producer price may be difficult to calculate for yet another reason, also related to the complexity of the supply chain:

...farm gate prices vary from day to day. Ensuring that a farm gate price on a particular day follows that particular fruit/vegetable all the way to the retail shelf could be challenging.[11] 

The effect of the Bill on producers

4.16      A number of submissions and witnesses also raised concerns that the implementation of the Bill may have unintended adverse effects on producers. 

4.17      Mr Grant Saler, a produce manager for a Foodlands supermarket in South Australia who previously held a similar position at a Coles supermarket, stated in a private submission that, in his view, the Bill 'may result in a small (short term) drop in some prices to the public but the flow on effect will be devastating for many small businesses'. This, he said, was because the major retailers:

...can split the added cost of providing, and keeping up to date, farm gate pricing information to the public between all of their stores. In most small businesses this will simply add extra staffing costs and either drive prices higher or make margins smaller, forcing some out of business...Eventually when they have forced enough of their small competitors out of business, they will thumb their nose at everyone and charge whatever they like and no one will be able to stop them.[12]

4.18      The evidence also suggested that producers would be responsible for the cost of calculating the producer price or of establishing a system to inform retailers of the farm gate price. In some cases the concern was that retailers would force their suppliers to bear this expense. These issues clearly were in the mind of CGSA in its evidence to the committee:

Who is to pay for the cost of coming to these average farm gate prices, educating the retailer on how to do this and ensuring it is displayed clearly in their shops? We feel that trying to implement and police this Bill will be extremely costly and will be then another cost to be borne by the grower.[13]

4.19      The TFGA put the issue in quite strong terms:

TFGA believes that, rather than address inequities evident in the marketplace, the Bill in its current form would place farmers in an even worse position than they currently are. Inevitably, supermarkets would simply push compliance costs back on to farmers, as they have in the past for both mandated requirements and also for changes the retailers choose to implement themselves (eg standardised black cartons, everyday low prices etc.)  This is what causes the most concern for farmers, whose ability to pass on additional costs through the supply chain is non-existent. So they'd be expected to absorb these significant costs from already thin margins.[14]

4.20      Similarly, the Tasmanian Government, to quote one more example, stated:

Given the likely difficulties associated with the implementation of the various components of this Bill there are likely to be significant costs associated with compliance. It is unlikely that the major supermarkets will absorb this cost burden; more likely, compliance costs would be pushed back to the producer or, perhaps less likely, forwarded to the consumer.[15]  

4.21      In its evidence the SAFF put the case clearly from the producers' point of view:

SENATOR URQUHART:  A lot of the submissions we have received, and certainly some evidence we heard earlier today, outlined that, if this Bill were to come in, a lot of the costs associated with the administration of it would go back to the producers. What are your thoughts on that, and what would be your members' view if they had to carry the cost rather than the retailers?

Mr White:  If you look back in history, every time we have tried to make a change, somewhere along the line the consumer ends up paying for it. That is certainly not a good outcome; there is no doubt about that. As I said, most of them are not making much out of it anyway. But if it did increase the cost, that would certainly be a drawback from it. I am not sure whether that is going to be the case.[16]

4.22      The VFF also suggested that the Bill may cause a narrowing of the market to the detriment of small suppliers:

There is a concern that the large retailers will favour only large producers for sourcing produce for ease of administering.  This may mean a reduced market available.[17]

4.23      Woolworths, for its part, assumed that producers would have to bear this cost:

If information about buy prices and their costs associated with processing had to be disclosed, this would create a significant amount of red tape for farmers and place unnecessary regulatory burdens on them. Collating all their pricing information over a year, adapting their IT systems and supplying their commercial information to the various retail businesses would take considerable resources which would in turn diminish their profit margins.[18]

4.24      ANRA assumed the same:

...attempting to compile and maintain a database of ‘farm-gate prices’ for retailers to refer to would also impose a significant regulatory impost on farmers and the wholesale businesses they supply.[19]

4.25      Another way in which the Bill may have an adverse effect on producers, according to Woolworths, is that it may lead to a lowering of prices paid to farmers:

If farmers were forced to release pricing information to their buyers, it would potentially cause buyers to compare the rates they were charging others and force prices down across the market to match the lowest sell price.[20]

4.26      The committee notes that Woolworths may have power in the market for the purchase of fresh produce. As such, it would be as likely as any other purchaser to be responsible for what it has decried – the use of information about farm gate prices to lower the prices offered to producers.

4.27      CGSA made a similar point:

When these costs [packing, transport, marketing, agent costs] increase it does not increase the price on the shelf, it decreases the return to the grower – the lowest point in the chain.[21]

4.28      It also identified another potential problem:

Reducing retail prices will ultimately fall back on the grower as those further up the chain will not reduce their percentage of profit, this will only reduce the return to the grower.[22]

The producer price may be inaccurate and misleading 

4.29      A number of submissions suggested that, by relying on average prices over a 12 month period, the producer price will be inaccurate as it would not be reflective of variations in prices. The causes of those variations include extreme weather events, the seasonal availability of produce or the normal operation of the market.

4.30        Referring to this issue, the SA Fresh Fruit Growers Association stated in its submission:

The problem we see with the Bill is when growers get high prices for early season or late season fruit. We don’t want the high prices seen in a negative light if we have found a particular market advantage. 

4.31      As a result, it suggested:

The Bill could create more problems than it solves – could create a reign of confusion, mistakes, inadvertent misinformation, and so – ending in the whole thing becoming meaningless.[23] 

4.32      CGSA made a similar point: 'in many cases [prices paid to growers] can vary considerably during a season'.[24]

4.33      The Tasmanian Government cited the example of the effect of Cyclone Larry on the price of bananas as showing how extreme weather events 'would not be likely to have an immediate effect on a 12 month average "producer price"'.[25]

4.34      This result may occur from the effect of the normal, day-to-day operation of supply and demand, as reflected in wholesale market fluctuations in price. In its submission to the committee Woolworths stated:

Changes in retail prices closely mirror changes in market prices throughout the year. When a customer views an average annual buy price on a product it would have no relation to the price a retailer paid for the product in front of them.

Strawberries are an example of a product that is seasonal and therefore the buy price would vary greatly throughout the year in line with supply and demand.[26]

4.35      In addition to the possible inaccuracy of the producer price identified above, submissions indicated that there are many factors that go into making the retail price, none of which would be reflected in the producer price, as defined in the Bill. Comments in submissions on this issue included:

The Tasmanian Government:

...given the various steps in the supply chain, it is not likely that the simple display of the producer price will provide the consumer with an accurate understanding of whether the retailer is over-charging for the particular item, or conversely, if the retailer has not paid the producer a fair and reasonable price.[27]    

AFGC:

Consumers may also not understand the inevitable disconnect between movement in retail prices which may happen from week to week, with the more stable “average” farm gate prices displayed as required by the Bill, again undermining their confidence in the system.[28] 

PMA Australia-New Zealand:

For the consumer, showing a farmgate price will only be of any value if:

...

the same system was in place through all other outlets where the same product can be purchased (e.g. independent retailers, online stores, farmers’ markets, etc), so that the consumer can make an informed comparison of the prices paid to producers through the different "channels to market".[29] 

NSW Farmers' Association:

A farm gate price alone will misrepresent the cost of supplying fresh produce, such as freight, storage, labour etc.[30]

ANRA:

...retail food prices also reflect transport, processing, storage, handling and marketing costs, amongst others, in addition to profit margins. This is also recognised implicitly within the definition of farm gate price in section seven (7) of the Bill.[31]  [italics supplied]

4.36      The possibility that the producer price will be misleading led to a further concern – that it will confuse consumers who are not aware of those factors and, as a result, they may make incorrect assumptions about the retail price, with adverse consequences for producers.

4.37      CGSA put this possibility very clearly:

If there is not complete transparency it is possible that consumers may react to seeing what appears to be the supermarket "ripping off" producers and reduce their purchases, therefore a negative result.[32]

4.38      It then speculated that consumers may 'react by perhaps opting for frozen rather than fresh or other products', such as muesli bars, grains, dried fruit or beans, about which they will have no such information.

4.39      The NSW Farmers' Association believed that displaying a producer price 'may confuse profit with revenue in the public's eye, suggesting domestic farming operations are price gouging'.[33]

4.40      The AFGC suggested that:

...if farm gate prices were provided, in many cases consumers may judge the retail prices to be unfair and unreasonable, possibly without justification leading their confidence in receiving value for money in purchases to be undermined, and loss of trust in the supply of that particular batch of produce.[34]

4.41      The ACCC, as the body charged with policing the producer price, also noted the potential for the producer price to be misleading, something which would no doubt impact on its ability to enforce its provisions:

We otherwise note that, should the Bill proceed, careful communication with the public as to its use may also be required to avoid any misunderstandings. I will give two examples as to what I am talking about there. Firstly, the disclosure required under the Bill does not seem to take into account the complexities of the costs faced by retailers and others in the supply chain. So what, on the face of it, might appear to be a high margin for particular produce may, in reality, be much lower when the higher costs associated with transport or storage, for example, are taken into account. Conversely, a relatively modest apparent margin for other produce may be greater, when such costs are actually low.

A second example of where I think consumers have the potential to misunderstand these provisions is in comparing a retail price at a point of time when an annual average producer price could lead to some confusion. For example, retail prices in season may be lower than the 12-month average producer prices, potentially giving false impressions of below cost pricing. Conversely, retail prices out of season may well be significantly more than the 12-month average produce price, potentially giving the impression of margins much greater than they actually are.[35]

Necessity for the Bill

4.42      The committee received evidence that questioned whether the Bill was necessary. Some submissions and witnesses challenged the fundamental assumption underlying the Bill – that producers are being underpaid for fresh produce in comparison to the price being charged by retailers.

4.43      Naturally, two of these submissions were received from Woolworths and ANRA, each of which referred to the ACCC's findings, quoted in Chapter 2 of this Report.[36]  ANRA expanded on this point:

Indeed, it appears a primary motivator for the Bill is the mistaken belief that grocery retailers are earning ‘unfair’ margins. In contrast, food retailing margins are well below average. Australia’s food retailers achieved a pre-tax profit margin of only 5.8% in 2009/10 – less than six cents for every dollar of sales. This compares with 5.3% for the retail sector and 11.1% across all industries.[37]

4.44      Less expected were the comments from citrus growers (whose names have been withheld from publication). They stated:

The citrus industry is struggling this year - it would have to be the worst year in history. Many of the returns we have received will not even pay for the fruit to have been picked let alone the costs of irrigating, fertilising, weediciding.

This is actually NOT the fault of the supermarkets though. This is due to the high Australian Dollar and limited export markets which have caused an incredible oversupply of produce needing to be sold locally.[38]

4.45      They went on to explain that the blame for the low prices being received by producers at present resulted from the actions of their fruit packers:

Most Growers in our region sell their fruit to a packing shed whom will then pack, market and transport the fruit and then determine what the grower will return. The grower has no input into it and depending on the packing shed, will depend on how much the grower knows about where their fruit is going.

The citrus packing sheds need a good marketer and a good marketing strategy to sell the amount of citrus it puts through the packing shed. This year has seen a couple of larger packing sheds panicking because of the amount of fruit they needed to sell and the very limited markets they could supply. Their strategy seemed to be to drop the prices to ridiculous levels to gain more market share. All this did was create a price war with no extra product being sold and the grower suffering because of it. At no time did Woolworths or Coles demand these ridiculous prices – they were offered to them by the packing shed marketers or the wholesale marketers trying to sell either fruit coming in to be packed or packed stock sitting in their coolrooms.[39]

4.46      This view was repeated in CGSA's evidence to the committee on
15 November 2011.[40]

4.47      The concept of a farm gate price, as envisaged by the Bill, was questioned in other submissions. Woolworths, for example, stated:

...the actual concept of a farm gate price as defined in the proposed Bill simply does not exist. This is because a farmer is not paid for “produce available at the farm” as the Bill requires. The price paid to farmers when they first on-sell their produce will include various levels of value adding that is not separated out from any basic price for harvested produce. For instance, the wholesaler or grower may first undertake activities such as packing, transport, grading and quality control.[41]

4.48      PMA Australia-New Zealand also touched on this in its submission:

...there are very few products that are available at the farm-gate in the same form that they are harvested, i.e. the produce almost always incurs some costs of transportation, processing or storage or profit margin to get it from the paddock to the “farm-gate”. Therefore, the calculation of farm-gate price (as defined) is in itself complex and open to different interpretations and application.[42]

4.49      Other submissions questioned the necessity for the Bill on different grounds:

• The Tasmanian Government believed the invisible hand of the market could address the problem.[43]  
• The NSW Farmers' Association stated that it 'has not been made aware of evidence that suggests that this labelling system would alter the spending habits of consumers, or the prices received by producers'.[44]
• ANRA challenged the need for the Bill from an economic point of view, though the committee notes that the following analysis does not, in fact, address the discrepancy between the price paid to producers and that paid by customers of the major retailers:

ANRA acknowledges that Australian food prices have increased by 44% or 3.5% on average per year between the year 2000 and 2010. This has occurred during a period where Australian households faced broadly similar (3.0% on average) increases in the prices of most other household expenses over the corresponding period.

...

During this time incomes have increased by 4.8% on average per year and the proportion of household budgets devoted to food has actually fallen from 14.4% in 1998/99 to 12.1% in 2009/10.[45]

The Bill is not the right solution to this problem

4.50      Contrariwise, a number of submissions accepted that there was a discrepancy between the prices being paid to farmers and the retail price of fresh produce, however, they did not believe the Bill was the correct solution to this problem.

4.51      The Western Australian Farmers Federation suggested that the Bill needed
to be part of a larger strategy:

Further, in addition to point of sale considerations, to be effective, WAFarmers believes that the initiative must be delivered as an overall package which (1) educates the consumer to initially understand what is being displayed, and then to make informed choices about locally produced food, and (2) delivers an investigative and prosecution response where breaches are reported.[46]

4.52      The AFGC favoured an approach apparently modelled on that being introduced in the United Kingdom. It stated:

...there is a strong case to introduce a co-regulatory Supermarket Fair Trading Code of Conduct overseen by a Supermarket Ombudsman. The Code of Conduct would provide guidance on acceptable approaches of trading terms and contract negotiations. The Ombudsman would be an umpire to assist resolving concerns and help create a level playing field in the highly concentrated supermarket industry. The Ombudsman would promote fairness along the supply chain and provide recourse for those participants in the food and grocery sector who lack market power, particularly producers and small-to-medium food manufacturers The Ombudsman should also be supported by retailers as it will provide a mechanism for them to address ongoing concerns regarding asymmetry in market power and concerns stemming from concentration in the retail sector.[47] 

4.53      CGSA saw the problem as one related to the market for Australian produce.
It told the committee:

The solution? We need to increase demand in Australian fresh produce and work harder towards truth in labelling. Any label that says 'Australian' should be 100 per cent Australian and it should be bold and stand out from many anything else on the supermarket shelf. Advertising and marketing by government funding would educate the consumer on how important it is to buy Australian and how easy it is to find the Australian product with the new truth in labelling laws. Consumers today are confused. They have no idea where the products they buy come from. Labels are confusing and time consuming to the point where in the end the consumer will stop reading them.[48]

4.54      To the extent that it believed there was a problem, CGSA did not believe
the Bill went far enough:

SENATOR EGGLESTON:  Should we put farm gate prices on frozen goods as well, then?

Cathy Lowe:  I think that, if you are going to do farm gate pricing, you have to put it across the whole board.[49]

4.55      The SAFF supported the Bill but also believed that it should have a wider operation:

Certainly the Farmers Federation support the intent of this Bill, although we do not believe it goes far enough. We believe it should cover all foodstuffs. What we are really about is getting some integrity and honesty back into the marketplace so that the consumer can be well informed when they make decisions about buying food—where it has come from, who produced it and all the rest of it. At the moment there is a great deal of confusion out there.[50]

4.56      One suggestion about how to deal with relationships between retailers and producers, again assuming there is a problem that must be fixed, is to extend the operation of the Horticulture Code of Conduct to major retailers. At present it applies only to dealings between farmers and wholesalers.[51]

4.57      This was raised by Senator Xenophon in his questioning of ANRA:

SENATOR XENOPHON:  Let us go to something that is currently up and running: the mandatory horticulture code of practice. One of the criticisms made of that by some commentators is that the code of practice only goes from farmers to packers, and in some cases to wholesalers, but does not actually go to the supermarkets. The loop is not closed, in a sense. What does ANRA say and what do your members say about including supermarkets in the horticulture code of practice?

Ms Osmond:  We would be against it for this reason: for much longer than the horticulture code of practice has been in place, our members have been signatories to the Produce and Grocery Industry Code of Conduct, and they have been for quite some time. They would have internal codes of conduct and internal produce codes of conduct already which are embedded into the operational activity of those companies. From their perspective, the relationship and fair dealing model is embedded within their operations already and an additional layer of paperwork is an additional layer of paperwork.

SENATOR XENOPHON:  Sure, but if your members are already complying with internal requirements and with codes of conduct, if there is a requirement to ensure that we know what happens from the producers' point of view down the supply chain until it ends up in the supermarket shelf so that there is one code that can be enforceable by the ACCC by an independent statutory body, surely it would not be an unreasonable onus. It would only be those outliers who are not doing the right thing that would be subjected to it.

Ms Osmond:  One of the aspects of this, I think, is that codes of conduct and government legislation never seem to gel quite as nicely as we would like them to. As we have embedded practices now, it is quite likely that we could find ourselves with a new code of conduct which is just subtly different, one which makes the world of difference in terms of how you manage a company and the additional red tape associated with it.

SENATOR XENOPHON:  But if the underlying basis of the embedded practices is fair dealings in the supply chain, and that is the underlying basis of any mandatory code of practice, how would that be particularly onerous to your members?

Ms Osmond:  It would depend upon how exactly the two pieces of the puzzle matched. More to the point, I suppose, my attitude to this would be a little bit along the lines of 'if it is not broken, why fix it' and if it is the outliers who are the problem in this space, why not concentrate on them as opposed to those who are doing the right thing at this point in time?[52]

4.58      The role of the Horticulture Code of Conduct was also raised with the National Farmers' Federation:

SENATOR XENOPHON:  ANRA...says, 'We have our own internal codes, we behave ethically; it's completely unnecessary. It just adds complexity if you include us in that loop.' I do not buy that argument, but that is their argument in a nutshell.

Mr McElhone: Yes. We talked about the complex supply chains and the fact that in not all circumstances do retailers engage directly with the farmer, and that is indeed the case. That is why there are complexities in the horticultural code—because, under the Horticulture Code of Conduct, if you are a retailer or even a wholesaler working in the wholesale markets on behalf of a retailer, then you are not bound by the conditions of the code. It has created a lot of confusion and misunderstanding within the wholesale markets, which is where the cultural change is needed, but there are a lot of carve-outs and a lot of loopholes and, in essence, it has created a lot of confusion within the wholesale marketplace for horticulture.

SENATOR XENOPHON:  So we should include retailers?

Mr McElhone: If you include the retailers, you simplify the problem. At any rate, the horticulture code is about making sure that we have written contracts, invoices, something that documents the point of sale. Retailers, by and large, know that in the vast majority of cases, if not all cases, they do actually have written contracts, invoices and terms of trade with their suppliers. So they are already complying with what we see as being the goal of the horticulture code, so we do not see why they should be sensitive about being bound by its conditions. That is just one issue, and I do not want to suggest that that is the only issue we have with this.

SENATOR XENOPHON:  Yes. But it is certainly a step in the right direction to close the loop?

Mr McElhone: Absolutely, yes. I would say that there have been some recommendations made by the ACCC—and that was one of the recommendations, making it applicable to all parties.[53]

4.59      The committee notes that these issues are outside the scope of the inquiry and are only mentioned for completeness.

Navigation: Previous Page | Contents | Next Page