Supermarkets face huge fines under powerful food and grocery code of conduct

Fines of up to $10m will act as a deterrent to ensure supermarkets act in good faith when dealing with suppliers and farmers.

Fruit Growers Victoria chairperson Mitchell McNab hoped the overhauled food and grocery code of conduct would live up to its promise. Picture: Zoe Phillips

Farmers want further competition reform from the Albanese government to stop supermarkets abusing their market powers when dealing with suppliers.

The government’s promise to overhaul the food and grocery code of conduct has been welcomed by farming groups, but some say it should be only a first step towards cracking down on predatory behaviour.

Supermarkets will be forced to sign a strengthened code to regulate the relationship with suppliers following a review by former Labor minister Craig Emerson.

More harmful breaches of the code, which is currently voluntary, could attract penalties of up to $10m and will apply to grocery retailers and wholesalers with an annual turnover of more than $5bn, which includes Coles, Woolworths, Aldi and Metcash.

Dr Emerson’s review found that smaller suppliers feared retribution if they spoke out and recommended stronger protections against retaliatory action and specific protections for suppliers of fresh produce who are at a distinct disadvantage because of the perishability of their products.

“The heavy imbalance in market power between supermarkets and smaller suppliers in Australia’s highly concentrated supermarket industry demands a mandatory code of conduct,” Dr Emerson said.

The government has agreed to adopt all 11 of Dr Emerson’s recommendations, which include ­establishing an anonymous complaints mechanism and mediation and arbitration channels.

Jim Chalmers said: “This is all about ensuring a fair go for farmers and families. This is all about making sure that the big supermarket chains do the right thing by their growers and their suppliers and their customers.”

Mitchell McNab, who grows apples, pears and stone fruit near Ardmona in central Victoria, said the proposed fines could be a genuine deterrence to retailers from abusing suppliers.

“Now it comes to the crunch of getting the government to implement these changes to give them meaning for growers and suppliers,” Mr McNab said.

“Hopefully, this will shift the balance of power back to growers to help them have better negotiations with retailers. The challenge and concern for most growers is, in the past, Senate inquiries and the like have not yielded what was promised.”

The National Farmers Federation’s Horticulture Council said the updated code would be a “vast improvement” but several options had been “left on the table”.

Separate inquiries into supermarket are being conducted by the ACCC and a Senate committee. Nationals leader David Littleproud backed the changes but said they had come too late for farmers and families facing cost-of-living pressures.