The introduction of a mandatory Food and Grocery Code of Conduct will be a positive step for farmers and families, NSW Farmers says, but they say more needs to be done. 

A voluntary code of conduct for major supermarket chains was introduced in 2015 to improve standards of business behaviour in the food and grocery sector but is essentially non-binding. 

On Monday 1 July the federal government announced that it would impose new obligations on supermarket chains to treat their suppliers fairly, or the supermarkets will face fines of $10 million or three times the financial benefit of the breach. 

The soon-to-be-mandatory code will stop unreasonable demands or threats by supermarkets on suppliers and will apply to companies with an annual revenue of $5 billion.

The threshold means the code will cover Woolworths, Coles, Aldi and Metcash - the company the supplies many independent grocery stores. 

Craig Emerson. Image: The Australian. 

The compulsory code was the main recommendation of a review conducted by former Labor minister Craig Emerson. 

The government will adopt all 11 of Dr Emerson's recommendations.

But while making the code mandatory, significantly increasing penalties for breaches, and providing better support for farmers in disputes with the supermarkets were positive steps, NSW Farmers Horticulture Committee chair Jo Brighenti-Barnard said there was still a long way to go in solving Australia’s supermarket problem. 

“We welcome this report which confirms what we’ve been saying all along – there needs to be meaningful competition reform so Australian farmers and families can get a fair go at the checkout,” Ms Brighenti-Barnard said. 

Image: thegilgandraregion.com 

“For too long farmers have been afraid to speak out because of the sheer might of these two big supermarkets, so options for independent mediators and arbitrators who can set enforceable actions is a good step, but growers need to be able to use them without fear of retribution. 

“It will be critical for farmers to have an active role in drafting this mandatory code so it is practical and fit for purpose.” 

Among the findings in the report were enormous penalties for breaches of the code – something NSW Farmers had been seeking – but Ms Brighenti-Barnard said courts rarely imposed the maximum penalty. 

“As long as farmers are selling their fresh food for a few cents a kilo and supermarkets are charging families a few dollars a kilo, we’ll all continue to feel the pain,” Ms Brighenti-Barnard said. 

Jo Brighenti-Barnard. Inage: The Northern Daily. 

The Greens also argue that the code of conduct will not bring down food and grocery prices. 

“Food and grocery prices won’t come down unless we make price gouging illegal, and create powers to break up the supermarket duopoly,” Greens Economic Justice Spokesperson Senator Nick McKim said. 

“We will bring our divestiture bill to a vote on Wednesday this week.” 

The bill would empower the ACCC to break-up large supermarket chains, aimed at what they say is stopping the reduced competition caused by the duopoly of supermarkets in Australia. 

“Divestiture powers exist in numerous free-market economies around the world, and the Chair of the ACCC has confirmed that greater competition in the supermarket sector would bring down food and grocery prices.”