- A horticulture produce agreement, commonly known as a HPA, is a contract between a grower and trader.
- It sets out agreed terms and conditions of trade.
- A written horticulture produce agreement must be in place before a grower and trader can start trading.
The Horticulture Code of Conduct covers certain horticulture trade between growers and traders.
A written horticulture produce agreement must be in place before a grower and trader can start trading. The agreement must comply with the horticulture code.
If you trade without an agreement, you will be in breach of the code and a civil penalty or an infringement notice may apply.
To be valid, agreements need to meet certain conditions under the code:
- horticulture produce agreements must be in writing
- both parties must accept the agreement by:
- signing it, or
- giving a written notice of offer and acceptance. This can be a letter, by email or text message.
The written record of the acceptance must be kept for at least 6 years after the agreement expires. It should include details of both parties.
There are minimum requirements that a horticulture produce agreement must meet.
Some requirements are relevant to all horticulture produce agreements. Clause 16 of the horticulture code sets out what must be included in all agreements.
Agreements must specify whether the trader is an agent or a merchant and there are extra requirements for each one:
- if the trader is an agent, clause 17 sets out extra details that must be included in the agreement
- if the trader is a merchant, clause 18 sets out extra details that must be included in the agreement.
Term of the agreement
If a horticulture produce agreement is to operate for a limited time, it must specify the term of the agreement.
How the agreement can be changed or ended
Horticulture produce agreements must detail the process for varying or terminating the agreement.
If a horticulture produce agreement is for a period of 90 days or more, or has no end date, it must have a cooling-off period allowing either party to end the agreement in writing. This can be done:
- within 14 days of entering into the agreement, or
- a shorter or longer period as agreed between the parties. However, the agreed period cannot be less than 7 days.
Delivery of horticulture produce
The horticulture code doesn’t define delivery.
Horticulture produce agreements must specify any delivery requirements for horticulture produce.
Horticulture produce agreements must include any quantity requirements for the horticulture produce.
Agreements must also include product standards for horticulture produce.
Growers and traders can include their own quality specifications.
They can also use FreshSpecs produce specifications. FreshSpecs is administered by Fresh Markets Australia and contains specifications for:
- general appearance criteria
- major defects
- minor defects
- consignment criteria.
Agreements must state how the trader will deal with produce that doesn’t meet the quality or quantity requirements.
Rejecting horticulture produce
A trader can only reject horticulture produce based on reasons stated in the horticulture produce agreement.
If a trader rejects horticulture produce, they must notify the grower within 24 hours of rejecting it. If the trader fails to give notice within this time, they can face penalties. The trader must also give reasons for rejecting the produce within the period stated in the horticulture produce agreement.
The horticulture code allows traders to pool horticulture produce from many growers. The pooled produce must all be the same quality as specified in each horticulture produce agreement.
If a trader intends to pool a grower’s horticulture produce with produce from other growers, the agreement must specify the:
- quality requirements
- specifications used to determine the produce quality.
Payments and fees
Horticulture produce agreements must state the period in which the agent must pay the grower the proceeds of selling their horticulture produce, less any deductions. The grower must be paid within the timeframe stated in the agreement.
An agreement between a grower and an agent must state if there are commissions, fees or extra costs. If so, it should include:
- situations where a grower may be charged
- the basis on which the commissions or fees will be charged, such as percentage or fixed basis
- the amounts or rates.
Horticulture produce agreements must state the period in which the merchant must pay the grower for produce delivered by the grower.
The grower must be paid within the timeframe stated in the agreement. If payment is not received within the timeframe, the grower can notify the merchant in writing of their intention to:
- suspend any further deliveries until payment is made
- cancel the agreement.
If payment is still not made, the grower can then take the notified actions.
A merchant can charge a grower for extra services. For example, for ripening, washing or packing the produce. The agreement needs to specify:
- the details of the extra service
- the fee the grower will pay the merchant for the extra service.
A horticulture produce agreement between a grower and a merchant must specify how the price will be determined.
If a method or formula is to be used, the method or formula needs to be specified in the agreement.
If the price is to be agreed, it needs to be specified whether it will be before or upon delivery of the produce.
Report an alleged breach of the horticulture code or misconduct affecting your business. We use these reports to identify issues that need investigation.