Agribusiness 20 January 2025

Are You Compliant? Horticulture Code Breaches Are Costing Traders Thousands

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Recent breaches of the Horticulture Code of Conduct have resulted in significant penalties for traders. In 2023, several companies, including Nutrano, GetFresh Merchants, and Total Food Network Australia, faced fines ranging from $24,850 to $43,150 for violations such as failing to enter into compliant Horticulture Produce Agreements (HPAs), not publishing terms of trade, and neglecting mandatory reporting requirements. These penalties highlight the increasing enforcement focus of the Australian Competition and Consumer Commission (ACCC) and the costly consequences of non-compliance.

The ACCC has made it clear that ignorance of the law is no excuse, and traders who fail to meet their obligations under the Horticulture Code of Conduct (Code) risk significant financial and reputational damage. But what exactly does compliance look like, and how can you avoid falling foul of the Code?

Understanding the Horticulture Produce Agreement (HPA)

A HPA is a written agreement between growers and traders (agents or merchants) that outlines the terms of growing, harvesting, marketing, or selling horticultural produce. It is a legal requirement under the Code, a mandatory industry code prescribed under the Competition and Consumer Act 2010 (CCA).

This article delves into the key components of a compliant HPA, the consequences of non-compliance, and the steps traders and growers must take to ensure their agreements meet legal standards. Read on to ensure your practices align with the law—and avoid becoming the ACCC’s next target.

What is a Horticulture Produce Agreement?

A HPA is a written contract between growers and traders (either agents or merchants) of horticulture produce. It sets out the terms and conditions under which the produce will be grown, harvested, marketed, or sold.

  • Agents: Sell the grower’s produce on behalf of the grower for a commission or fee.
  • Merchants: Purchase the produce from the grower for resale.

HPAs are governed by the Horticulture Code of Conduct (the Code), a mandatory industry code under the CCA. The Code promotes transparency and fairness in transactions and provides dispute resolution procedures for issues arising under the Code or an HPA.

The ACCC enforces the Code, ensuring compliance and protecting competition and consumer rights in the horticulture industry.

What Happens if the Code is Breached?

The Code mandates that growers and traders must have a compliant HPA in place before trading begins. Non-compliance, such as trading without an HPA or having a non-compliant HPA, can result in civil penalties or infringement notices.

Recent Breaches and Penalties

Ensuring compliance with the Code is crucial for fair trading practices in the horticulture industry.  Recent enforcement actions by the ACCC) highlight the importance of having a compliant HPA.

Recent Enforcement Actions:

  • Galati: In December 2024, Western Australian horticulture wholesaler Galati paid $62,600 in penalties after the ACCC issued four infringement notices for alleged contraventions of the Code. The ACCC alleged that Galati traded with at least four growers without a horticulture produce agreement in place and provided growers with statements that did not specify the quality of some produce, as required by the Code.
  • Total Food Network Australia: In February 2024, Total Food Network Australia paid $27,000 in penalties after the ACCC issued two infringement notices for failing to enter into a Horticulture Produce Agreement before trading and failing to publish its terms of trade.
  • GetFresh Merchants: In 2023, GetFresh Merchants, a fruit and vegetable supplier based in Perth, was fined $43,150 for various violations of the Code, including failing to enter into a Horticulture Produce Agreement before trading and failing to publish its terms of trade.
  • Nutrano: In October 2023, Nutrano paid $24,850 in penalties after being issued with two separate infringement notices, one for an allegedly non-compliant Horticulture Produce Agreement and another for failing to report sale prices as mandated by the Code.
  • Green Endeavour and Bache Bros: In 2023, fruit and vegetable wholesalers Green Endeavour and Bache Bros each paid penalties of $13,750 after the ACCC issued them with infringement notices for failing to publish their terms of trade.

Is Your HPA Compliant?

To comply with the Code, a HPA must meet specific requirements to ensure transparency and fairness between growers and traders.

Key Elements of a Compliant HPA:

  • Trader’s Role: Must specify whether the trader acts as an agent or a merchant.  A trader must avoid conflict roles, a trader cannot act as both an agent and a merchant under the same HPA. The role must be clearly defined.
  • Written Agreement: Must be signed by both parties and cover all trading terms.
  • Terms of Trade: Traders must publish clear and accessible trading terms.
  • Delivery & Rejection: Outline delivery requirements and conditions for rejecting produce.
  • Insurance Coverage: Detail insurance terms and the maximum cover available.
  • Produce Standards: Include quality, quantity, and specification standards.
  • Address Pooling of Produce (If Applicable): If the trader pools the grower’s produce with that of others, the HPA must specify the quality requirements for pooled produce and the standards used to determine the quality of the pooled produce must be detailed.
  • Payment & Reporting: Define payment terms and provide regular reporting.
  • Review and Update Agreements Regularly: Ensure that the HPA remains compliant with the latest requirements of the Code and review and amend terms as necessary to reflect changes in business practices or regulations.
  • Dispute Resolution: Include contact details for resolving disputes.
  • Termination & Cooling-Off: Specify how agreements can be terminated and allow a 14-day cooling-off period for agreements lasting 90 days or more.

Final Notes:

Non-compliance with the Horticulture Code can result in significant penalties, as demonstrated by recent ACCC enforcement actions. To ensure your Horticulture Produce Agreement is compliant and to avoid potential penalties, it is advisable to seek professional guidance.

For expert advice and assistance in drafting or reviewing your HPA, please contact Georgina Parisis or Tom White in our Agribusiness Team.

Disclaimer:  The information provided above is for general informational purposes only and does not constitute legal advice. While we have made every effort to ensure the ac­curacy and reliability of the content, it is not intended to replace professional legal advice tailored to your specific circumstances. Agribusinesses are encouraged to seek advice from qualified legal professionals to ensure compliance with relevant laws and regulations. We do not accept any liability for actions taken based on the information provided in this document.

Georgina Parisis.
Georgina Parisis Special Counsel Corporate & Commercial | Agribusiness View profile
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