Big Call for mandatory, enforceable Code of Conduct

Dr Craig Emerson certainly didn’t mince words this week with the release of the Interim Report for the Independent Review of the Food and Grocery Code of Conduct.

In his opening statement Dr Emerson said, “A heavy imbalance in market power between suppliers and supermarkets in Australia’s heavily concentrated supermarket industry necessitates an enforceable code of conduct.”

“The existing Food and Grocery Code of Conduct (the Code) is not effective. It contains no penalties for breaches and supermarkets can opt out of important provisions by overriding them in their grocery supply agreements,” he went onto say.

It was pleasing to see QFVG’s submission align with what has been discovered – an imbalance in market power, incentivised poor retailer market behaviour and real fear of commercial retribution. This is a validation for suppliers and the many gagged voices that make up our industry. 

The central recommendation is that the currently voluntary Code be made mandatory and come with it substantial and enforceable penalties.

While this is all well and good, it can only be of benefit if we get the reporting process right where growers feel completely protected to speak up. Because right now this process is fundamentally flawed. We will be keeping close watch to understand how proposed new reporting processes will potentially play out.

Another interesting observation that was noted in the report was the use of buyer incentives that “reward maximising retail margins and penalise low margins” effectively incentivising the category managers to squeeze suppliers (growers) as hard as possible. 

For too long retailers have been asking our growers to be sustainable and cut costs. They have nothing left to give. The burden on our growers is enormous. How about we incentivise good market behaviour instead - behaviour change 101 really. And while we’re at it here’s a new KPI for you - let’s write the sustainability of Australian fresh produce and producers into retailer requirements. Because let’s face it, if they are not part of ensuring we have fresh fruit, vegetables, and nuts for generations to come then we (and they) have a huge problem because they are a major part of our supply chain.