Transcript: ABC Country Hour – Grocery code
26 February 2015:
The beefed up grocery industry code of conduct has been more than a year in the making. Now just days before it is likely to be enacted, the Federal Small Business Minister Bruce Billson says finally there will be greater protections in place for suppliers.
We have seen examples of conduct ranging from outright unconscionable to pretty poor form happening in the supply chain with some of our major supermarkets.
It has put enormous pressure on suppliers, particularly where they are heavily dependent on those supermarkets for the livelihood of their businesses and that sets up quite an imbalance in bargaining power.
A chance to be really pushed around by the big supermarket chains and this is recognition by the supermarket sector itself that improved conduct needs to be supported.
The code will shape a better environment for that good faith, fair commercial dealings between suppliers and the big supermarket chains.
Can you explain for me what the code will address and how that will protect suppliers?
Certainly. It puts in place some standards of business conduct in that grocery supply chain to try and ensure the trust, cooperation, shared interests, and fair dealings is what goes on in those negotiations.
It is also about transparency and certainty in those transactions.
Actually having a supply agreement that outlines the kind of expectations each party has of the other.
Making sure that bills are paid on time so that suppliers are not left dangling wondering when they are going to be paid.
It also puts in place some dispute resolution processes where, if there are concerns that suppliers have, the feedback we have had is that because suppliers are so dependent on just a handful of supermarket chains, sometimes they are quite reluctant to raise concerns.
We have put in place the dispute resolution process so that those complaints can be dealt with and above all, it is aiming to promote good faith in those commercial dealings.
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.
Bruce Billson again.
I think those recent court cases have put to bed the suggestion that there are not examples of appalling behaviour.
Those court cases have said look, let us forget about that fiction. There is court evidence. There are clear examples where conduct has been unconscionable.
It has been helpful in the sense of putting to side a fiction that it is only the odd aberrant buyer or a rare example of bad conduct. We are past that now.
I think all the supermarket chains realise this is an issue that requires the attention and this code, so I am very optimistic that the supermarket chains will sign up.
Farm groups were pushing for a mandatory code. This one is voluntary.
Gary Dawson is Chief Executive of the Australian Food and Grocery Council. He says it is the most significant development in many years.
The code is a real opportunity to delineate the past from the future. It’s a potential circuit breaker really.
And I think that’s why it’s important that it have broad coverage. Obviously we would like to see all of the major retailers sign up to it.
Now this is a voluntary code do you think it goes far enough?
Yes I do and there is an important reason for that. This is a voluntary sign up, but this code is to be prescribed and that means it will be tabled in Parliament as a regulation under the Act. And that’s an important step because it means a breach of the code means a breach of the Act.
No one in the fast moving consumer goods space really wants any more regulation than is necessary.
It’s a dynamic, fast moving market. And generally speaking market forces are the best way to determine outcomes.