After extensive consultation, the Federal Government has announced a tougher code of conduct for grocery retailers and wholesalers.

The beefed-up voluntary code has been more than a year in the making and is expected to be enacted in the coming days.

The Government is pushing for all supermarket chains to sign up quickly to ensure greater protections for suppliers.

Federal Minister for Small Business Bruce Billson said it was overdue.

“We’ve seen examples of, let’s say, conduct ranging from outright unconscionable to pretty poor form happening in our supply chain with some of our major supermarkets,” he said.

“It’s put enormous pressure on suppliers, particularly where they’re heavily dependent on those supermarkets for the livelihood of their businesses.

“That sets up quite an imbalance in bargaining power, a chance to be really pushed around by the big chains.”

Mr Billson said the code would shape a better environment for good faith, fair commercial dealings between suppliers and supermarkets.

“It puts in place some standards of business conduct in that grocery supply chain to try and ensure the trust, cooperation, shared interest, fair dealings in what goes in those negotiations. It’s also about transparency and certainty in those transactions,” he said.

“It will ensure there is a supply agreement in place which outlines the expectations each party has of the other, making sure the bills are paid on time, so suppliers aren’t left wondering when they’ll be paid. It also puts in place a dispute resolution process.”

In December, Coles was ordered to pay a $10 million out of court settlement, admitting it engaged in unconscionable conduct in its dealings with nearly 200 grocery suppliers.

Mr Billson said court cases like that one had put to bed any doubt that appalling behaviour did exist.

He said the major supermarkets had been very involved in the draft process and he was confident they would sign up to the code.

Most significant development in years

The Australian Food and Grocery Council (AFGC) is also urging the supermarkets to get onboard.

Council chief executive Gary Dawson said it was an opportunity to delineate the past from the future.

“It’s a potential circuit breaker and that’s why it’s important,” he said.

“It has broad coverage and we’d like to see the major retailers sign up to it. There’s no reason for any of them not to.”

Mandatory not voluntary

Farming groups maintain they want a mandatory code, not a voluntary one.

In a statement, the National Farmers Federation said it had closely monitored the development of the voluntary code and would review its effectiveness once it was enacted.

“The farm sector continues to have a strong interest in ensuring there is transparency and equity right across the agricultural supply chain, from saleyards to supermarkets, and we will continue to work with the relevant stakeholders to ensure this occurs,” it said.

The AFGC’s Gary Dawson said the code did not need to be mandated and that no one in the sector wanted any more regulation than was necessary.

“This code is to be prescribed, it will be tabled in parliament under the Act (Competition and Consumer Act) and that’s an important step, because it means a breach of the code will become a breach of the Act.,” he said.

“This is light touch regulation, but still effective in addressing the key areas in the retailer-supply relationships and with the backing of the ACCC (Australian Competition and Consumer Commission).”

Mr Billson said the code was binding in its application and overseen by the regulators.

But he insisted a mandatory code was not off the table.

“There is no good reason why they (supermarkets) shouldn’t sign up, and if they don’t, we’ll have to reconsider our approach and look to step up the framework to ensure all are involved,” he said.

“If we don’t get the level of participation that is necessary, then there is an alternative and that is for a code that forces participation of the supermarket chains. We’re not at that point yet.”

Woolworths said it would not comment until the code was released.

ABC Rural’s calls to Coles and wholesaler Metcash were not returned.

Extracted in full from ABC.