The Australian Government has agreed to implement all 11 of the final report's recommendations into the Australian Food and Grocery Code.
Craig Emerson has published the final report of his review of the Food and Grocery Code of Conduct, which includes 11 recommendations including making the currently voluntary code mandatory.
Following the review, the Australian Federal Government announced it would accept all 11 recommendations and prioritise new legislation to support the changes.
“This is about giving families and farmers a fair shot,” Agriculture Minister Murray Watt said in a statement.
“Our efforts will help ensure Australia's supermarkets are as competitive as possible and ensure Australians get the best possible prices.”
The final report maintains the recommendations made in the interim report and proposes maximum fines for the most serious breaches to be the greater of A$10 million, three times the profits gained from the breach, or 10% of turnover in the 12 months preceding the breach, if profits cannot be determined.
In addition, Mr Emerson recommended penalties of more than A$1 million for other breaches and also recommended the ACCC be able to issue breach notices carrying fines of up to A$187,800.
“The penalties I am recommending for breaches of the food and grocery code are the most severe in the industry code of conduct,” Mr Emerson said.
The 2015 code was originally created to address harmful practices in the grocery industry resulting from an imbalance in bargaining power between supermarkets and their suppliers.
In January 2024, the Prime Minister, the Minister for Finance, the Minister for Agriculture, Fisheries and the Permanent Secretary for Competition, Charities and Finance appointed Mr Emmerson to lead the Code Review for 2023/24.
The review involved 65 stakeholder meetings, two producer roundtables with Agriculture Minister Murray Watt, two processor roundtables and 88 formal comments on the consultation document and interim report.
“Our research finds that current voluntary codes fail to address the imbalance in bargaining power between supermarkets and their suppliers, including farmers,” Mr Watt said.
“Suppliers fear they will face retaliation from supermarkets if they raise concerns or exercise their rights under the code.”
To fully implement the recommendations, regulations and amendments to the Competition and Consumer Act 2010 are needed, and the Government has said it will make this a priority.
Ausveg, the peak industry body for Australian vegetable, potato and onion growers, welcomed the Australian Government's commitment to adopt the recommendations.
“Retailer-supplier relationships are complex and we commend Dr Emerson for listening to the concerns raised by industry and, in turn, the government for committing to implementing the recommendations,” Ausbeg chief executive Michael Coote said.
“Many of these recommendations, if implemented effectively, have the potential to improve business relationships between producers and retailers and help ensure that producers receive a fair and sustainable price for their produce.”
However, Couto noted that it will take some time before the recommendations are actually implemented.
“While we await further details on measures and timing, I also want to stress the importance of governments and regulators continuing to consult with the industry to advance reforms that will bring about real change to the bottom line for struggling vegetable growing businesses,” he said.
The next statutory review of the Food and Grocery Act will commence within five years of the Compulsory Act coming into force.
