The ACCC has initiated proceedings against one of Australia's largest potato and onion packers Mitolo Group over unfair terms in its contracts with potato farmers.
The Australian Competition and Consumer Commission (ACCC) says the company breached the Horticulture Code in its dealings with farmers.
Mitolo's contracts including terms that allow it to unilaterally determine or vary the price it pays farmers for potatoes, unilaterally vary other contractual terms, declare potatoes as “wastage” without a mechanism for proper review, and prevent farmers from selling potatoes to alternative purchasers, accirding to the ACCC.
Mitolo’s contracts also contain a term preventing farmers from selling their own property unless the prospective purchaser enters into an exclusive potato farming agreement with Mitolo, which the ACCC also alleges is an unfair contract term.
“This is the first court action the ACCC has taken under the newly introduced Horticulture Code, and our first unfair contract terms action in the agriculture industry,” ACCC deputy chair Mick Keogh said.
“The issues in this case go to the heart of concerns about unfairness in the agriculture sector that led to the establishment of the ACCC’s dedicated Agriculture Unit, which is investigating agricultural supply chains and engaging with the sector.”
“These are some of the most egregious terms we have seen in agricultural contracts, and are key examples of the contracting practices in the sector that we want to address.
“We believe that these terms have caused, or could cause, significant detriment to farmers, by passing a heavy burden of risk down to farmers, the most vulnerable player in the supply chain."
The ACCC also alleges that Mitolo is trading with potato farmers under contracts that do not comply with the pricing requirements of the Horticulture Code, by failing to specify in its contracts whether the price for the produce will be determined by a method or formula, or before or upon delivery; and by failing to agree with growers on the price to be paid (or a pricing formula) for produce, in writing, before or upon delivery.
AUSVEG CEO James Whiteside said the organisation had recognised the ACCC’s actions.
“The Horticulture Code was introduced to improve clarity and transparency of trading arrangements between growers and traders in the horticulture sector,” Whiteside said.
“As an industry, we stand by the Code and what it represents and support that all parties must abide by the law. We recognise the right that the ACCC has to enforce civil penalties and infringement notices on growers and traders. We will watch the proceedings with interest.”
The Horticulture Code of Conduct is a mandatory industry code prescribed under the Competition and Consumer Act 2010. It came into full effect on April 1, 2018.
