Growers and traders need to comply with the Horticulture Code when buying and selling horticulture produce.
The Horticulture Code of Conduct is a mandatory industry code prescribed under the Competition and Consumer Act 2010. The Code aims to improve the clarity and transparency of trading arrangements between growers and traders in the horticulture sector.
The Code applies to growers and traders. Traders can be either a merchant or an agent.
The following table explains the difference between growers and traders.
|Grower||John is a farmer who owns an orange orchard and produces fresh oranges. John is a grower.|
|Agent||John sells his oranges via Fruit Agents Pty Ltd, who takes them to the local fruit market and finds a buyer for John’s oranges. Fruit Agents Pty Ltd is an agent who receives a commission or fee from John.|
|Merchant||Sometimes John sells his oranges directly to Orange Buyers Pty Ltd. Orange Buyers Pty Ltd buys directly from John and then sells the oranges on to Big Supermarket Pty Ltd. Orange Buyers Pty Ltd is a merchant who buys produce for the purpose of resale.|
The Code does not apply to purchasers of horticulture produce who sell directly to consumers.
Horticulture produce is unprocessed fruit, vegetables (including mushrooms and other edible fungi), nuts, herbs and other edible plants, but excludes nursery products.
- prohibits trading in horticulture produce without a horticulture produce agreement
- specifies a number of record keeping requirements for parties to an agreement
- requires a payment period to be specified and traders to pay growers within the payment period
- introduces an obligation for all parties to act in good faith in their dealings with each other
- introduces financial penalties and infringement notices for breaches of certain provisions of the Code
- allows parties to accept horticulture produce agreements by electronic means including emails confirming an offer or acceptance
- allows traders to pool horticulture produce under an agreement with other produce provided it meets agreed quality standards
- allows merchants and growers to use a method or formula to price horticulture produce under an agreement, as opposed to only a fixed price
- requires horticulture produce agreements to specify the FreshSpecs Produce Specifications or other specifications that will be used to assess the quality of horticulture produce
- has a defined dispute resolution procedure
- allows for ACCC investigations & audits.
On 1 April 2017, the Horticulture Code came into effect. The Code replaces the old Horticulture Code established by the Trade Practices (Horticulture Code of Conduct) Regulations 2006.
The new Code applies from 1 April 2017. If you trade in horticulture produce on or after this date, you must comply with the terms of the Code.
There is a 12-month transition period for parties with existing written agreements. After this transition period ends, all agreements need to comply with the current Code. This includes agreements entered into before 15 December 2006, which were not covered by the earlier code.
During the transition period, the following parts of the Code will not apply:
|If the agreement was entered into...||Then the parts not applicable are...|
|before 15 December 2006||trader’s terms of trade, horticulture produce agreements and conduct generally|
|between 15 December 2006 and 31 March 2017||trader’s terms of trade and horticulture produce agreements|
If these agreements are varied before 1 April 2018, the parts of the Code referred to above will apply to the agreements from the date they are varied.
Some parts of the Code apply immediately to all agreements, including those entered into before 15 December 2006. These parts include:
The Code sets out a number of general obligations that the parties must comply with.
- traders and growers must deal with each other in good faith
- a trader cannot act as both an agent and a merchant under the one horticulture produce agreement
- traders must accept horticulture produce delivered under a horticulture produce agreement, except where the horticulture produce agreement permits them to reject it
- if a trader rejects horticulture produce, they must notify the grower that the produce has been rejected within 24 hours of rejecting the produce
- traders must exercise reasonable care and skill in handling and storing the growers horticulture produce that is under their control
- traders must give the grower payment for horticulture produce within the specified payment period
- agents must act in the best interests of the grower when selling horticulture produce and not sell a grower’s horticulture produce, other than on 'an arm’s length basis'
- traders must give a statement to growers setting out the details of transactions.
The Code prohibits growers and traders from trading in horticulture produce without a Horticulture Produce Agreement that specifies certain matters. Penalties apply for trading without a Horticulture Produce Agreement.
Traders must prepare, publish and make publicly available their terms of trade. Traders have been given a 12-month transition period to comply with the new Code. However, if existing terms of trade are varied before 1 April 2018, the new Code will apply from the date they are varied.
A trader’s terms of trade are the standard terms and conditions under which the trader is prepared to trade with growers. In negotiating an agreement, traders can vary these terms to meet the needs of individual agreements with growers. However, a trader must be prepared to include a term from its terms of trade in an agreement if a grower asks for it.
Terms of trade must comply with the Code and contain certain specific information. Clause 11 of the Code sets out the information that should be included in the terms of trade.
If a trader changes the terms upon which they are prepared to trade, the trader must prepare an updated document that sets out the changes to the terms of trade, and publish and make publicly available the document in the same way as the original terms of trade.
The Code does not apply to:
- nursery products – including trees, shrubs, plants, seeds, bulbs, cut flowers or foliage or propagating material and plant tissue cultures
- retailers – businesses buying produce for retail sale
- exporters – businesses buying the produce for export
- processors – businesses buying the produce for processing.
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