ACCC investigation leads to chicken contract changes

An investigation by the ACCC has resulted in some large Australian chicken processors addressing potentially unfair contract terms. The investigation was conducted in relation to the use of unfair terms identified in the Perishable Agriculture Goods (PAG) Inquiry final report, with the new terms meant to reduce unfair conditions for growers.

Chicken processors typically operate slightly differently to other livestock providers, with processors supplying growers with chickens, feed and medication but retaining the ownership of the birds, and growers provide land, sheds, shed fit-out equipment, labour, water, utilities and insurance. The contract between the grower and processor specifies the methods the grower must use to care for the birds.

The PAG report argued that some chicken meat processors were benefiting from contractual terms that let them reduce growers’ prices mid-contract, impose additional costs or to vary supply arrangements. Some terms also required substantial investments from the growers or had termination clauses the ACCC deemed imbalanced.

Responding to the PAG report, a Bill was introduced by the Australian Government in February this year to enhance protections against unfair contract terms in the Australian Consumer Law.

“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 contract changes are meant to provide certainty and transparency for growers and clarity for the circumstances when processors can impose additional costs on them. A balancing of notice periods for termination clauses has also been introduced. Other changes cover the circumstances whereby a processor can require a grower upgrade their farm facilities and when processors are allowed to make changes to their grower manuals.

Image credit: ©stock.adobe.com/au/Anton Dios