Horticulture Code of Conduct – HPAs for growers
Do you have a horticulture supply contract, and is it legal?
If you’re an Australian fruit and vegetable grower, the Horticulture Code of Conduct may apply to you and the people you trade with. If the Code applies to you and you don’t have a valid Horticulture Produce Agreement (HPA) in place with each business that buys or sells your produce, you need to enter one as soon as possible in order to comply with the law. The Australian Competition and Consumer Commissioner (ACCC) is responsible for enforcing the Code.
It’s in your interests to have a valid HPA in place with each trader you deal with. By not having one, you have less control over important commercial issues such as payment times and rejection of your produce.
Growcom has produced HPA templates for growers. These are available by clicking here.
What needs to be in an HPA
Your HPA establishes the conditions of your commercial arrangement with the trader and how you will be treated in the event of a dispute. A valid HPA establishes:
- Payment terms
- how long a trader has to pay you
- what fees or commissions an agent will take from a sale
- how you and the merchant will decide on a price for your produce
- Quality standards
- what the trader will use to determine whether your produce is of an acceptable standard
- this can either be an existing industry standard, or one that you and the trader agree on yourselves
- Rejection rights
- under what circumstances can the trader reject your produce
- how long they have to reject your produce
- Termination and renewal
- when you or the trader can terminate the agreement
- what rights you or the trader have to extend or renew the agreement.
What do I need to do?
The amount of time you have to enter into a valid HPA will depend on your current arrangements with the traders you supply.
If you are currently trading under an agreement that was entered into before 15 December 2006 or you have an HPA that complies with the old Code, you have until 1 April 2018 to enter into a new HPA or amend your existing one so that it meets the requirements of the new Code.
However, if you have a written agreement which was not valid under the old Code, or no written agreement at all, you may be operating illegally and need to enter into an HPA with each trader immediately.
What happens if I don’t have an HPA?
You aren’t complying with the Code if you don’t have an HPA with each trader you deal with. If you don’t comply with the Code, the ACCC may issue you with an infringement notice specifying that you pay a particular penalty amount (as an alternative to court proceedings). Or a court may order you to pay penalties.
The ACCC can ask growers and traders to provide any documents you are required to make or keep under the Code. This allows the ACCC to check compliance with the Code and take further action if you aren’t doing the right thing.
What is the Horticulture Code and what does it mean for you?
The Code is a mandatory industry code covering the sale of unprocessed horticulture produce, such as fruit, vegetables, edible fungi and nuts. The Code aims to ensure transparency and clarity of trading arrangements in the horticulture industry, and provide a fair and equitable dispute resolution procedure.
The Code first applied to transactions that took place after 15 December 2006. It was updated on 1 April 2017 to offer more protections and increased flexibility in trading arrangements. It now applies to all trading arrangements between a grower and a merchant or agent.
A ‘merchant’ is a business that buys your produce and then on sells it to another business in Australia; an ‘agent’ is someone who sells your produce for you. The Code refers to agents and merchants collectively as ‘traders’.
The next time you communicate with your agent or merchant, ask whether they know of the changes to the law and if you are both trading legally. If they are unsure, the ACCC has published guidance material online (www.accc.gov.au/horticulturecode), including example HPAs. Your grower representative body should also be able to assist you to comply with the Code.
This article was provided by the ACCC for Guacamole 1 September 2017. The Growcom HPA template link was added on 1 December 2017.
Date Published: 01/09/2017