AUSTRALIAN farmers are in desperate need of an ombudsman to offer them some protection in dealings with traders and supermarkets, says KRIS NEWTON

The horticulture industry - worth $9 billion annually to regional and national economies - expects that producers be able to operate in a reasonable business environment, with opportunity for fair competition.

By fair competition, we mean transparent relationships in the value chain with an opportunity for market growth by meeting consumer demands.

We also mean a reasonable cost of doing business, a reasonable sharing of risks and rewards and relationships between suppliers and customers not distorted by market power.

In 2007, after several government inquiries that identified widespread abuse of market power and lack of transparency in the sale of fruit and vegetables, the Federal Government introduced a mandatory Horticulture Code of Conduct to regulate transactions between wholesalers and growers and create a "reasonable" business environment.

Industry was aware the implementation of the code would be difficult and protracted, as it represented a major cultural shift for all parties.

There were also significant financial incentives for some parties, particularly traders, to resist or avoid compliance.

Nevertheless, HAC is disappointed with the lack of enforcement activity, and poor uptake.

For many wholesalers and other traders, it is "business as usual" in terms of their trading practices.

Sadly, many have refused to negotiate contracts; and growers feel powerless to pursue a code-compliant contract.

Without significant and widespread enforcement, traders retain their ability to transfer risk, and unilaterally set produce prices and other trading terms.

Growers are still intimidated into selling their produce (frequently highly perishable and with a short season) on the traders' terms, because the alternative is to let their produce rot, or not harvest it in the first instance.

As a consequence, the code has not yet addressed either the imbalance of power in the marketplace, or the issues of market failure, that it was established to tackle.

HAC contends that the most time-efficient and cost-efficient method of ensuring compliance with the code is for ACCC-authorised officials to pro-actively conduct spot checks.

This would be intended to ensure that each transaction checked is compliant with the code.

Pleasingly, the Government recently announced it would amend the Trade Practices Act to give the ACCC greater checking and audit powers.

We see the role of an ombudsman as integral to the compliance and enforcement function.

The previous ombudsman role for the separate Produce & Grocery Code was replaced by a mediation adviser to cover both codes before the horticulture code commenced.

While able to compel the parties to the table, the adviser has no teeth to enforce compliance, or to refer illegal activity to the proper authorities.

We strongly endorse the return of an independent ombudsman, endowed with sufficient powers to "investigate complaints, report findings, and mediate fair settlements".

The Ombudsman should be able to act as a "first port of call" to assist growers and traders and conduct or oversight spot checks.

They should also be given strong investigatory powers, to order redress where warranted, and to expose dishonesty.

As well, they should have the power to see a trader's records, to compel the parties to the table and to refer matters to the mediation adviser.

They should also have the power to recommend to the ACCC that legal action be taken and the ability to "name and shame" in Parliament.

And an ombudsman with real teeth should be given indemnity from the threat of legal action arising from the performance of their responsibilities under the code.

Finally, a major weakness with the code is that it's too restricted.

It should not just be for wholesale horticulture transactions, but also cover supermarkets, processors, exporters - that is, all transactions linking growers to consumers.

In other words, one in, all in, with a powerful ombudsman at the helm.