Australian government announces Food and Grocery Code of Conduct review

The Australian government has appointed Craig Emerson to lead the 2023–24 review of the Food and Grocery Code of Conduct (AFGC) to ensure that the supermarket sector is working as it should. 

“Supermarkets have a duty to make sure they’re providing affordable options for all Australians, especially when they’re making savings on their own costs,” said Prime Minister Anthony Albanese.  

Emerson was the federal minister for small business from 2007-2010 and minister for competition policy and consumer affairs from 2009-2010. He was minister for trade from 2010-2013. He is a former Queensland Government director‑general and senior economic adviser to Prime Minister Bob Hawke. 

Minister for agriculture, fisheries and forestry Murray Watt said retailers didn’t need to wait for the review to make changes and ease pressure on consumers and suppliers. 

“We’ve been making clear for many months now that retailers should start dropping their prices to reflect the reduction in prices farmers are getting for their produce,” Watt said. 

“Farmers deserve a fair price for their hard work and some of the prices supermarkets are charging just don’t pass the pub test. 

The AFGC is a prescribed voluntary code under the Competition and Consumer Act 2010. Once a retailer or wholesaler has signed up, they must follow the rules of the code. In this case, Aldi, Coles, Woolworths and Metcash are signatories to the code and are therefore bound by it. 

The code was introduced to improve standards of business behaviour in the food and grocery sector and regulates the conduct of these retailers and wholesalers towards suppliers. 

The AFGC is scheduled to sunset (be automatically repealed) on 1 April 2025. Prior to sunsetting, a review of the code is required to determine whether it remains fit for purpose. 

The review will include a public consultation process, but no information is currently available on how the public can become involved.  

Ausveg is preparing a submission for the AFGC review and is seeking comment from growers. Some of the suggestions under consideration include making the AFGC mandatory rather than voluntary, enabling greater equity around the weekly price negotiations for perishable goods and implementing fines and financial penalties for those businesses or individuals that breach the AFGC, including mechanisms to compensate disadvantaged suppliers. 

National Farmers’ Federation (NFF) president David Jochinke welcomed the appointment of a chair to take the review forward but added there was still a long way to go to fix Australia’s competition issues. 

“The code is failing farmers and we’ve said for a long time it should be made mandatory,” Jochinke said. “We need to get to the bottom of why there’s a growing gap between what farmers get paid and what produce is being sold for on supermarket shelves. 

The review comes amid broader pressure on supermarkets to become more transparent on pricing structures including a Senate inquiry into price setting practices and market power of major supermarkets announced in December 2023.  

Coles chief executive Leah Weckert said: “We know cost of living pressures are front of mind for many Australians and we are working hard to keep prices affordable for Australian households.  

“We have worked collaboratively with previous inquiries and are ready to work with the Committee and engage in an informed discussion on the factors that influence supermarket pricing. 

Woolworths Group chief executive Brad Banducci had a similar response. 

“We are very aware of the pressures facing many Australian families,” he said. “We welcome the opportunity to explain to the senate how we are working to balance the needs of our customers, our team and our suppliers in the context of economy-wide inflationary pressure. 

“As we have done at several inquiries this year, we will openly and constructively assist the parliament with its work on this important topic.”