HortCode_DL Brochure 15.6.07.indd

							Horticulture
Code of Conduct

—an Outline
About the code
The Horticulture Code of Conduct regulates
trade in horticulture produce between growers
and wholesalers of fresh fruit and vegetables and
establishes a fair and equitable dispute resolution
procedure. The aim of the code is to improve the
transparency and clarity of these transactions.

The Horticulture Code of Conduct is a mandatory
code under s. 51AE of the Trade Practices Act 1974
and as such, has the force of law.

The code was developed to address the lack of
commercial transparency in grower/wholesaler
transactions. The Australian Government decided
to develop the code after growers and wholesalers
failed to agree on voluntary arrangements to
increase transparency.

The code will benefit growers and wholesalers
by improving business practices in the fruit and
vegetable wholesale sector. Growers will also benefit
from better information about how wholesalers buy
and sell their produce.

The Australian Government Minister for Agriculture,
Fisheries and Forestry has Ministerial responsibility
for the code, while the Australian Competition and
Consumer Commission (ACCC) informs traders and
growers of their rights and obligations under the code
and enforces the code if necessary.
The key requirements of the code
The code requires that growers of horticultural
produce have written agreements in place when they
trade with wholesale agents or merchants.

The code covers transactions between growers and
wholesalers of fresh fruit and vegetables in Australia.
It requires:
• wholesalers to publish their preferred
  ‘terms of trade’
• growers and wholesalers to use written agreements
• wholesale transactions to be either on an
  agent or merchant basis
• wholesalers to provide written transaction
  information to growers.

An agent transaction occurs when a wholesaler sells
produce on a grower’s behalf for a commission or fee.

A merchant transaction occurs when a wholesaler
buys a grower’s produce for resale.


Wholesaler terms of trade
Wholesalers are required to prepare a ‘terms of trade’
document that sets out basic information on how they
intend to do business with growers. Wholesalers are
required to make their terms of trade freely available
and also to provide copies at the request of growers.
Horticulture produce agreements
Growers and wholesalers are required to use
written agreements which specify how produce
will be traded. Agreements must include details
such as whether the wholesaler will trade as an
agent or a merchant, payment information and
reporting timeframes. An agreement can be for
a number of transactions or a single transaction;
it is not necessary to sign a new agreement for
each consignment or price change.


Growers and agents
In an agent trading arrangement ownership of
produce remains with the grower until the produce
is sold and then ownership transfers to the buyer.

An agent is required to pay the grower the
proceeds from the sale less any commissions,
fees and extra amounts specified in the
horticultureproduce agreement.

The code requires that agents act in the best interests
of growers when selling produce, and that the sale
takes place on an ‘arm’s length’ basis.
Merchants and growers
The price to be paid by a merchant is required to
be agreed in writing. The price can either be agreed
before delivery or immediately upon delivery of the
produce to the merchant.

If the price is agreed before delivery, then ownership
of the produce transfers to the merchant on delivery.
If the price is agreed immediately upon delivery, then
ownership of the produce transfers once the price
has been agreed.


Written transaction information
A wholesaler must provide a grower with a written
report containing basic information about the
purchase of the grower’s produce, under a merchant
transaction, or the sale of the grower’s produce,
under an agent transaction.

When acting as an agent the wholesaler must report
on times and dates of delivery of produce, dates of
sales, type and quantity of produce, prices received,
amounts deducted by the wholesaler and details of
produce not sold.

When acting as a merchant the wholesaler must
report on dates and times of delivery and purchase,
quality and quantity of produce and prices paid.

A wholesaler must provide the grower with the
report within a set period agreed by the grower
and the wholesaler in the written agreement.
The report can be for a single delivery or for a
period of time as agreed.
Requirements for rejection of produce
If a wholesaler decides to reject a grower’s
produce, he or she is required to contact the grower
immediately and provide written notification of the
rejection and the consequences of the rejection.
A wholesaler can only reject produce for reasons
outlined in a written agreement.


Horticulture produce assessors
Horticulture produce assessors can be appointed by
growers and wholesalers to investigate and report on
any matters under a horticulture produce agreement.
An assessor can be appointed regardless of whether
a dispute has been lodged under the code. The
grower and the wholesaler must comply with a
reasonable request made by the assessor when
investigating a matter.

It is expected that an assessor will mainly investigate
and report on whether:
• produce was rejected in accord with
  the agreement and the code
• payments by the wholesaler were calculated
  in accordance with the code.

Having an independent assessor will help resolve
many issues and concerns without the need for
mediation or expensive legal action.

The list of horticulture produce assessors is available
from the mediation adviser’s website
www.hortcodema.com.au
Resolving disputes
Growers and wholesalers can use any type of
dispute resolution procedures they choose.
However, if either a grower or wholesaler wishes
to use the code’s dispute resolution process then
the other trading party must comply.

In the first instance, the code calls for the two
parties to attempt to resolve the dispute themselves
and, if that fails, to participate in mediation.

A mediation adviser will provide low cost mediation
services under the code. The Australian Government
is providing funding to make sure that mediation is a
low-cost alternative to legal action.
For more information on the code,
please visit:
Department of Agriculture, Fisheries and Forestry
website www.daff.gov.au/hortcode

Australian Competition and Consumer
Commission website
www.accc.gov.au/industrycodes
or call the ACCC Infocentre on 1300 302 502.

Horticulture Mediation Adviser
website www.hortcodema.com.au or
call the mediation adviser on 1800 206 385.


                                          DAFF job no. 950537