Horticulture Code updated with stronger protections and penalties

The Horticulture Code is a mandatory code of conduct that aims to create transparency around the grower-trader relationship and establish fair dispute resolution mechanisms in the horticulture industry.

There have been recent changes to the Code that strengthens the protection it provides. As a grower, you need to know how the changes affect you and what your rights and obligations are under the Code.

What is the Code?

The Code covers trade in unprocessed horticulture produce, such as fruit, vegetables, edible fungi and nuts, and applies to growers, agents and merchants.

The Code operates to create transparency in the relationship between you (the grower), agents and merchants. It does this by requiring all parties to have a written contract with each other, called a Horticulture Produce Agreement (HPA). It is now illegal to trade in horticulture produce without a HPA and all parties, including growers, agents and merchants, can be subject to penalties if they don’t have a HPA.

You should seek legal advice if you are unsure whether your HPA is compliant with the Code.

What does the new Code mean for HPA contracts?

The Code, in one form or another, has been around since 2006. The most recent changes to the Code, which give growers of horticulture produce stronger protections, came into effect on 1 April 2017.

Before 1 April 2017, if you had contracts that you had entered into before 16 December 2006 you did not have to comply with the Code. Because of these long-standing agreements, up to 80 per cent of trade in horticulture produce had no Code protection. The updated Code changes this. Pre-16 December 2006 contracts must now comply with the Code, along with all HPAs entered into since 16 December 2006. If you had a contract in place before 1 April 2017, you have until 1 April 2018 to make sure your HPAs are compliant with the updated Code. However, if you amend an existing HPA or enter into a new HPA, you must ensure that the HPA complies with the Code immediately.

What other changes does the new Code bring?

Since 1 April 2017, all parties are entitled to the Code’s dispute resolution processes, must comply with the new record-keeping requirements, and have an obligation to act in good faith.

Good faith means acting reasonably and not exercising your powers arbitrarily or for some irrelevant purpose. Your conduct may lack good faith if you act dishonestly, for an ulterior motive or in a way that undermines or denies the other party the benefits of a contract.

Growers have important protections. The Code requires traders to pay growers by a specified date, regularly report to the grower on sales, and exercise reasonable care and skill in handling growers’ produce.

Growers and traders must also retain certain records for at least six years.

The new Code also sets out a process for resolving disputes, although parties are free to choose their own process if they wish.

If someone suffers loss because of a breach of the Code, they have a right to take legal action to recover their loss. The Code also sets out that the Australian Competition and Consumer Commission (ACCC) may seek penalties through the courts where certain sections of the Code are breached.

You can find more information on the Horticulture Code, including examples of template HPAs and other information on the new Code, at accc.gov.au.