Australian chicken processors address potential unfair contract terms
1 June 2022
2 minute read
By: According to a report by The Australian Competition and Consumer Commission (ACCC), some of Australia’s largest chicken meat processors have agreed to change certain terms in their current contracts with chicken growers, following an investigation by the ACCC into the use of unfair contract terms in the industry.
The ACCC’s investigation identified a number of potentially unfair contract terms, including terms that allowed processors to vary growers’ supply arrangements or impose additional costs on growers. Some of the terms also required growers to make significant capital investments or contained imbalanced termination clauses.
“We were concerned that broad terms, such as allowing processors to vary supply arrangements during the term of the agreement, could potentially lead to significant financial harm to growers,” ACCC Deputy Chair Mick Keogh said.
“Several processors have agreed to amend certain contract terms to address some of the ACCC’s concerns.”
The changes that these processors have agreed to will provide some additional certainty and transparency for growers, including by clarifying the circumstances in which a processor may require growers to upgrade their farm facilities and when processors can make changes to their grower manuals.
Additional changes have been agreed to provide clarity about the circumstances in which processors can impose additional costs on growers, and to balance notice periods for termination clauses.
The ACCC’s investigation focused on the types of potentially unfair contract terms that were identified in its Perishable Agriculture Goods Inquiry final report.
“The thresholds and the lack of penalties in the current unfair contract term laws create challenges for investigations involving agricultural contracts. The proposed changes to these laws tabled during the last federal parliamentary sitting will, if enacted, better protect Australian small businesses against unfair contract terms, and will enable the ACCC to seek pecuniary penalties for breaches,” Keogh said.
“We expect all chicken meat processors to continue working with growers and grower groups until the contracts they have in place are clear and balanced. We’ll be monitoring the industry to see that it happens and will re-examine these and other contracts if unfair contract term laws are reformed.”
Processors will engage with growers and grower representative groups directly about amendments to their agreements.
