Most Queensland farmers are small to medium sized businesses, and when they engage in contract term negotiations with large, often multi-corporate processors, wholesalers and retailers, they frequently find themselves at a distinct disadvantage.
With the large companies able to use their market power, farmers are often subjected to unfair contract term provisions and squeezed with tight margins and prescriptive market specifications.
The Queensland agricultural sector along with the ACCC and other representative bodies has been calling for the introduction of penalties for unfair contract terms. The Government review of the unfair contract terms protections in 2018 resulted in a strong industry push and one of the key recommendations of the ACCC’s 2020 Perishable Goods Inquiry was to introduce penalties for unfair contract terms.
Last week, the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 passed both Houses of Parliament which will mean new and tougher penalties for companies that breach competition and consumer laws.
This was a commitment made by the previous Federal Government which has now been actioned by the new Parliament and will mean that companies that breach competition and consumer laws could face higher penalties of up to the greater of $50 million, or 30 percent of the company’s turnover during the period it engaged in the conduct if the value gained from the breach cannot be determined. The maximum penalty for an individual will increase from $500,000 to $2.5 million.
The changes also include the introduction of penalties for businesses that include unfair contract terms in their standard form contracts with consumers and small businesses. This is long overdue and welcomed by Queensland farmers.
Whilst these changes are a positive step towards a more level playing field, there is more work to be done. If we are to achieve competitive markets in our food supply chains, which will lead to improved food affordability, we need to ensure price transparency, and continue to work to stop bargaining power imbalances.
With input prices soaring and farmers battling the uncertainty and volatility of workforce shortages, extreme weather events and global supply chain disruptions, the real cost of food production is going up.
In the current climate, effective competition policy is more important than ever to prevent farmers and consumers from being exploited by large companies able to dominate supply chain trade due to their sheer market power. When it comes to food security, affordability and accessibility, farmers and consumers need a fair go.