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Grower Experiences

Growers have been calling for a mandatory code of conduct to oversee trading relations between themselves and their trading partners. The following case studies highlight why a code is needed.

Why can’t fruit be cattle?

Bob*, a farmer, operates a mixed horticulture and grazing enterprise and experiences significant differences in selling his fruit and vegetables compared with selling his cattle.

Bob sells his cattle via the local stock and station agent and they provide him with full details of prices individually itemised by quantity, customer and price. Other fees and charges are also detailed. Bob can track all of his sales and trusts the relationship he has with the agent.

However, when sending fruit and vegetables to his wholesaler in the central market, Bob faces a different situation. When he calls to his wholesaler to find out the price and customers for the five to six pallets of vegetables sold that day, his wholesaler is unable to give the information and responds that the "average price" has not yet been worked out.

As Bob has authorised (in writing) for the wholesaler to act as an agent, Bob finds this lack of detail unacceptable. Bob has sought more clarity on pricing without success.

In agency transactions, growers should always be able to obtain details about each buyer of their produce, the dates and quantities of what was sold, the quality of the consignment, the price each customer paid and the fees charged by the wholesaler.

Things don’t add up!

Gary*, a fruit grower, experienced a situation where the wholesaler reported to him that they had sold his cases of fruit for between $12 and $16 a case. When Gary was speaking to a greengrocer he knew, the greengrocer informed Gary that he had bought his fruit from Gary’s wholesaler for a minimum of $18 a case.

Seeing red, Gary contacted his wholesaler about the discrepancy between the prices. He was told that his wholesaler has to "make a win sometimes to carry you through the low times". Regardless of any other issues surrounding the comment, Gary believed that the difference between the reported and actual prices showed an example of wholesalers profiting at growers’ expense.

In other industries, business operators would be answerable for this behaviour and could be prosecuted.

Ask and you might receive...

In another case, a vegetable producer experienced a situation where he received "very low" prices for his produce.

When the producer queried the prices, the wholesaler sent the grower another cheque, effectively doubling the price received for the produce.

The grower believes this situation arises frequently in the market, imposing a substantial financial impact on farm business profitability.

A clear process for recording and reporting prices achieved for produce is essential.

Don’t ask questions?

Peter*, a Queensland grower, recognised that to be able to run his business properly, he needed some certainty regarding prices to allow for better budgeting and to ensure long-term profitability for the business and security of employment for his staff. In an effort to maintain returns at a sustainable level, Peter wrote and followed up with telephone calls to wholesalers requesting he be told - before fruit was sent - if the price for his fruit was likely to be under $12 per case.

Peter understands that with market fluctuations it may be hard to predict prices, in which case he requested that the wholesaler advise him of price trends in the market.

These letters were never acknowledged. Because payment for fruit was up to six weeks after sale, there was no way for Peter to act on falling prices.

Peter believes he has suffered substantial losses "too dramatic to quantify". Peter has since halved the area farmed and halved his staff levels.

Peter has continually brought this matter to the attention of wholesalers and has been ignored. The producer has changed wholesalers but the situation has not improved. He has been told by the wholesalers that "there are many more growers to acquire the fruit from if I don’t like the way they do business".

Risking the future of his business he has also used the RGIO dispute resolution process. However, the wholesaler involved will no longer deal Peter and will not come to the table for mediation.

Transparency is needed - the wholesalers should be showing the amount they charge for commission, and bullying tactics must be stopped.

*Growers have not been identified because of potential commercial disadvantage.

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