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Wednesday, 14 March 2018 11:15

Grain contracts re-jigged

Grain marketing organisation AWB Harvest Finance Pools Pty Ltd has made changes to its standard form grain pool contracts after the ACCC raised concerns that some terms in the contracts were unfair.


AWB’s grain pool contracts originally included terms giving it the power to:

  • unilaterally increase fees to growers, such as administration fees or management fees, after the contract had been accepted by a grower
  • introduce new fees to growers from time to time after the contract had been signed
  • reject grain at its absolute discretion.

AWB has cooperated with the ACCC to amend the terms of its grain pool contracts.
“Most Australian farmers operate as small businesses and often deal with much larger multinational businesses. These amended contracts should provide more certainty and balance to grain trading transactions entered into with growers,” ACCC deputy chair Dr Michael Schaper said. 
AWB’s amendments to its grain pool contract terms ensure that:

  • fees for its services will not vary after the contract has been accepted by a grower
  • no new fees will be imposed after the contract has been accepted by a grower
  • grain will only be rejected in limited circumstances.

“The ACCC welcomes AWB amending these contract terms, and reminds companies that they bear the responsibility of ensuring their standard form contracts comply with the unfair contract terms law. If the contracts don’t comply, companies may be subject to investigation and potential enforcement action by the ACCC,” Dr Schaper said.
“The ACCC will continue to focus on addressing bargaining power imbalances in agriculture.”
Background
The ACCC’s investigation into AWB’s contract terms followed its wider review of standard form contracts in the agriculture sector after the business-to-business unfair contract terms law came into effect in November 2016.
The ACCC was provided with additional funding of $11.4 million over four years to establish an Agriculture Unit to conduct investigations in agricultural supply chains and engagement in rural and regional areas. 
From 12 November 2016, the unfair contract terms provisions of the ACL were extended to cover standard form contracts involving small businesses.  In November 2016, the ACCC published a report about unfair terms in small business contracts following a review of small business contracts in a range of industries including in the agriculture sector.
Following deregulation of the Australian grain industry in 2008, Cargill Australia Limited purchased part of the Australian Wheat Board’s assets, including grain storage and handling assets.  It also operates grain pools in which growers elect to deliver grain into a pool and receive payments at specified intervals during the grain season.

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