Supermarket review: Farmers sceptical fines are enough to deter bad behaviour

‘Who is going to dob in their biggest customer?’ Farmers aren’t going to bite the hand that feeds them. They’re calling for something much bigger than $10m fines to take on the supermarkets.

Guy Gaeta grows cherries and apples near Orange in NSW and believes the only way to rein in the supermarkets is through divestiture powers. Picture: Graham Schumann

Farmers are sceptical that hefty new fines and a mandatory code of conduct would be enough to deter supermarket giants from mistreating suppliers and abusing their market power.

Economist and former Labor minister Craig ­Emerson’s interim food and grocery code of conduct review report, released on Monday, recommends fines of up to 10 per cent of annual turnover for retailers that breach the code.

However, the review has rejected a push from the Nationals and Greens for divestiture powers that would allow the Australian Competition & Consumer Commission and the courts to force the big supermarket chains to sell off stores if they unfairly inflated their prices.

NSW orchardist Guy Gaeta believes the threat of massive fines would just give farmers “false hope” that they could change the power dynamics.

“A $10m fine, that will never happen – who is going to dob in their biggest customer?” he said.

“What we need is divestiture powers, we need the big stick … but I am not holding my breath.”

Mr Gaeta, who has grown ­apples and cherries in Orange for 36 years, said competition regulators in some European countries already had divestiture powers which were “hardly ever used” but acted as a good deterrent.

Guy Gaeta grows cherries and apples near Orange in NSW and believes the only way to rein in the supermarkets is through divestiture powers. Picture: Graham Schumann

Anthony Albanese backed Dr Emerson’s rejection of divestiture powers, saying market power concerns needed serious responses rather than “a populist response that sounds good”.

Under Dr Emerson’s recommendations, the ACCC could issue infringement notices up to $187,800 for code breaches, but in order to chase larger penalties the competition watchdog and suppliers would have to take supermarket chains to court.

He also recommended suppliers be granted greater protection from retribution and floated the idea of establishing an anonymous complaints process.

Dr Emerson has sought “stakeholder views” before he ­is due to deliver his final report in June.

Johanna Brighenti, who runs an orange farm in the NSW Riverina region, welcomed anything that beefed up the code, but said she did not believe Dr Emerson’s recommendations were “the answer”.

“Why I say that is because with such a highly concentrated market … basically you can’t afford to bite the hand that feeds you otherwise you don’t get a pay check,” said Ms Brighenti who is chair of the NSW Farmers Horticultural Committee.

“They’re talking about an avenue of having a confidential system, but the problem is that the supermarkets would still be able to find out who you are due to the nature of the way you trade your business, what you’re supplying for and volumes of things.

“That is why people won’t speak up because if they do, they would eventually be found out.”

Ms Brighenti also said the ACCC should be handed divestiture powers.

“You need that big stick, it is in a lot of other countries,” she said.

“Because as it stands at the moment, you just don’t have the ability to have a fair trading relationship with a billion-dollar company. Even our largest corporate farmers are frightened to speak up.”