Check those contract terms

WA horticulture producers have been put on notice to check their contract terms with traders, after a Victorian fruit trader’s conditions were deemed “unfair” by the competition watchdog, despite being prepared by a horticulture trader industry group.

Red Rich Fruits recently agreed to change potentially unfair contract terms, which allowed the company to seek credit from a grower for produce Red Rich Fruits had on-sold to a third party, after the third party rejected the fruit.

Under the terms, which the ACCC determined were unfair, the grower was required to provide credit for the amount the third party had contracted to pay Red Rich Fruits for the rejected produce, which was likely to include the trader’s profit margin.

Worryingly, Red Rich Fruits’ horticulture agreement was prepared by a horticulture trader industry group, which distributed the agreement to its members.

ACCC deputy chairman Mick Keogh said the watchdog was concerned there may be “more widespread non-compliance in the industry”.

“We believe other traders may be using similar agreements in their dealings with growers,” he said.

“Traders must check their agreements do not contain unfair contract terms, and that they comply with the Code, which is mandatory for industry participants.

“The ACCC will continue to audit agreements and will take enforcement action where appropriate.”

VegetablesWA chief executive John Shannon said his organisation had raised the matter with the ACCC last year.

“There’s a real risk that this agreement is in widespread use across the country, including WA,” he said. “WA growers must check their current agreements and speak to their market agents about what horticultural produce agreement they are using.”

The ACCC is midway through auditing traders’ compliance with the Horticulture Code of Conduct, examining whether other agreements contain similar terms.

Mr Shannon said it was “disturbing” the ACCC believed the agreement produced by the horticulture trader industry group did not comply with the Horticulture Code of Conduct and unfair contracts law.

The mandatory code came into effect on April 1 last year, replacing the old one. It prohibits growers and wholesalers from trading in horticulture produce without a written agreement that complies with the requirements of the Horticulture Code. Traders can be hit with penalties of up to $63,000 for each instance of trading without a HC compliant agreement.

Mr Shannon said growers who found their terms did not comply with the Code could call him on 9486 7515.