Peak horticulture bodies and growers have welcomed the recommendations for a new code of conduct designed to impose major penalties on supermarket chains who take advantage of farmers.
Supermarkets with an annual turnover of more than $10 billion will be subjected to scrutiny and transparency in their dealings with producers or face fines of up to one tenth of their year’s income.
Former Labor minister Craig Emerson has released a substantial interim report as part of his independent review of the Food and Grocery Code of Conduct in which he recommends the code to be made mandatory.
The Federal Government has committed to implementing all 11 recommendations.
The changes are designed to end the decades-long ordeal of farmers being subjected to low farm gate prices made possible by the duopoly of Woolworths and Coles.
National Farmers’ Federation Horticulture Council chair Jeremy Griffith welcomed the report’s recommendations and said the public was becoming more aware of the supermarkets’ past practices.
“We are really pleased that the Federal Government is really focusing on the buying practices of the supermarkets, and the focus is that the public is becoming really aware about how exposed and vulnerable the fresh food growers are,” Mr Griffith said.
“The more focus on this, the better it is for the horticulture sector, and the public is now pushing back with saying ‘we’re not happy with what we are seeing’.”
Fruit Growers Victoria growers services manager Michael Crisera said a mandatory code was needed to protect farmers.
“Having a (past) voluntary code wasn’t something that the retailers took seriously,” Mr Crisera said.
“So it has always just been a race to the bottom with the tender process.”
Mr Crisera said that the good faith needed in the past had not always been honoured by the supermarkets.
“Sometimes I doubt that happened with the voluntary code but now it’s going to be good to have some transparency.
“Any kind of scrutiny on how prices come about is good.”
Toolamba vegetable grower and farmer advocate Ross Marsolino said he believed that supermarket CEOs were starting to realise that they have been doing the wrong thing by farmers.
“They are normal people, like you and me, doing a job but everybody has got that little bit of thinking in them, that they’ve been doing things wrong by the consumers also, doing the wrong thing by the whole country,” Mr Marsolino said.
“They are going to sit at home and ask themselves if it is worth getting that extra two or three million at the expense of the industry.
“You have got to be pretty hard and tough to think that way, but they are forced into being like that because at the end of the day the supermarkets want to show the shareholders a profit.
“We’ve got to find their soft spot.”
One key recommendation of the report addresses the issue of farmers being vulnerable to commercial retribution if they complained about prices.
Mr Griffith reiterated the past plight of farmers who were making minimal profit on their crops due to the low prices, to then see large mark-ups on supermarket shelves.
“Because growers have not raised the issue publicly, it has always happened behind closed doors for decades,” he said.
“And apart from fearing commercial retribution, growers were too busy to get involved in policy decisions.
“We need to make growers feel comfortable.”
Supermarkets can now be penalised with fines equalling the highest of either $10 million, three times the benefit gained from the poor conduct or 10 per cent of the previous year’s turnover.
Mr Griffith was still cautious about how the code would be enforced.
“To dramatically increase fines and penalties, that’s absolutely heading in the right direction, but how it becomes meaningful is where the devil is in the detail,” he said.
“But it is saying to the supermarkets: we are watching you, we have you on notice and we are starting to align the process so we can have a major impact on how to run your business.”
Mr Griffith said in a recent internal survey, one third of Australia’s vegetable growers wanted to leave the sector in the next few years.
“I think we are at this point of people wanting to sell because you cannot pass on your cost increases, so hard commercial decisions are difficult to make.
“They are telling me ‘none of my kids want to get into this business’ and who can blame them?”
Mr Crisera highlighted the need for ‘working together’ with supermarkets and wholesalers.
“They are important to us as we are to them,” he said.
“They have got to be profitable but not at the expense of their suppliers; growers need to make a living.
“The cost of labour is our biggest challenge in the industry, with it coming to 50 to 60 per cent of costs.
“People need to understand the cost to produce is much higher than our competitors overseas, but we need to make money domestically and be able to pay people.
“We need to keep people employed and to be paid properly because the current cost of living is not healthy.”
Mr MarsoIino said he did not contribute to the recent Senate inquiry into supermarkets because he wanted to let it progress and “see if there is any justice”.
“Let all the powers that be do their jobs and see if they can put something in place to protect the growers.
“If it doesn’t happen, we will see that as we go forward; so lets see if this Labor government has got any power.”
Mr Marsolino said he planned to scale down this year’s production until there was greater confidence with retailers.
“I can’t afford to grow as much this season, as the expenses are too high,” he said.
“When there is a little bit more communication of what’s going to happen, I will be wanting a little bit more confidence that the chains are going to do the right things by farmers before I put money into the soil.”
“Then I imagine all farmers will put a bit more into production.”