The Australian Competition and Consumer Commission (ACCC) has made concessions to the country’s largest chicken processors to make some of their contracts with farmers fairer.
Most important points:
- The ACCC found that unfair contracts could cause “significant financial damage to growers”
- Chicken processors have agreed to make some changes
- Labor has backed proposed reforms that could penalize companies for unfair contracts
The $3 billion industry is dominated by two large companies, with Ingham’s and Baiada Poultry supplying about 70 percent of Australia’s chicken meat.
The ACCC said the companies had too much power and the contracts could cause “significant financial damage to growers”.
The agency was asked in 2020 to investigate imbalances in bargaining power in supply chains for perishable agricultural products in Australia, and released its report later that year.
The processors have now agreed to make changes to contracts to clarify the circumstances under which they can require growers to upgrade their farm facilities, and when processors can make changes to their grower manuals.
Sudden changes to grower manuals can include things like changing the density requirements for birds in a barn, which can lead to high costs for growers.
The processors have also agreed to clarify the circumstances in which processors can impose additional costs on growers and to balance notice periods for cancellation clauses.
Chicken farmers’ problems don’t stop there
But Peter Wojcicki, chairman of the NSW Farmers Poultry Committee, said there were other issues growers had with the current situation.
One of the big ones is the variability in the growing fee between states and even between processors.
He said farmers would like to see some consistency in pay for the same work.
Mr Wojcicki said contract terms also varied.
“It used to be seven-year contracts, then they became five-year contracts,” he said.
Mr Wojcicki said there had been an exodus from the industry in the past four to five years, with 20 to 30 percent of poultry farmers leaving.
He said he hoped for more transparency and accountability in the contracts between grower and processor, because they are “acting secretly at the moment” and poultry farmers are in a weak position.
“And because the farmers want to stick to the contract, to their farm and to their income, they’re too scared to say anything about it.”
What happens now?
ACCC deputy chairman Mick Keogh said some progress has been made in obtaining concessions from the processors, which was a “good start”.
He said current laws allow illegal clauses in contracts to be nullified, but it was a process out of reach for many farmers.
“As the law is written at this point, there is no penalty for having an unfair clause in your contract,” Keogh said.
“What could happen, however, is that a court could overturn that clause.”
But the process is detailed and lengthy, and there is the potential for delays in court.
Mr Keogh said the ACCC instead sat down with processors and encouraged them to voluntarily remove the relevant clauses.
Proposed reforms to contract law — extending its application and imposing sanctions for unfair contract terms — were tabled in parliament just before the elections.
Mr Keogh said all indications were that the incoming government was inclined to go ahead with those reforms.
Ingham’s and Baiada Poultry have been contacted for comment.
#Relief #chicken #farmers #countrys #biggest #processors #agree #fix #unfair #contracts