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Food and Grocery Code – supplier survey reflects transition year

One year after the introduction of the Food and Grocery Code of Conduct a survey of suppliers has rated the major supermarket chains on their compliance with the code and found plenty of room for improvement.

Australian Food and Grocery Council (AFGC) CEO, Gary Dawson, said the survey of its member companies found high levels of knowledge and understanding of the code among suppliers, reflecting the high take-up of code training provided through the AFGC.

“It’s clear that suppliers appreciate the significance of the code which aims to improve trading relationships by requiring more certainty and transparency in retailer – supplier trading relations,” said Mr Dawson.

“The major supermarket chains Woolworths, Coles and Aldi have all voluntarily signed up to the code and the past year has been a transition year in which they have been required to make their trading terms code compliant.

Asked to rate how the major chains are complying with their code obligations, the supplier survey found:

  • 76.5 per cent rated Coles either “consistently well” or “mostly” compliant with the code;
  •  45.1 per cent rated Aldi either “consistently well” or “mostly” compliant with the code;
  •  41.2 per cent rated Woolworths “consistently well” or “mostly” compliant with the code.

“Given this has been a transition year as both suppliers and retailers have come up to speed with the code and worked it into their business practices, the results show that there is still a way to go in this adjustment,” said Mr Dawson.

“The survey results have been provided to the retailers and we have had constructive follow up discussions on the issues raised and ways of improving code compliance including training of staff, clarity and consistency in new code-compliant supplier terms, and practices that are still causing concern. The ACCC, which has oversight of the code as a regulation under the Competition and Consumer Act, has also been briefed.”

Mr Dawson said continuing code-related issues being raised by suppliers include: criteria for range reviews and delisting of products; requests to suppliers for payments to make up shortfalls in retailer profits; payment terms; and progress on new grocery supply agreements.

“We are encouraged by the way in which the major retailers that have signed the code and responded to issues raised during its implementation. Key to this has been constructively engaging with suppliers and the AFGC to improve communication on the operation of the code.”

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