Bruising fruit fight

Guy Gaeta has given up dealing with fruit merchants.

He now drives the five hours from Orange to Sydney several times a week to run his own stall in the growers shed of the Sydney Markets.

There he sells his apples and cherries direct to consumers and retailers to avoid the middle man.

"It's open slaughter (sic)," he says

The merchants "pay as little as you can to the grower, or as much as you can to keep him," he says.

"But we don't know what the thing is sold for. No government has ever been able to fix it up."

Growers want a receipt early, once their consignment of fruit and vegetables has arrived.

But meet the wholesalers at the Sydney Markets and they'll all tell you, it's just too complex to give a receipt for all the produce as it arrives in the early morning, before they have ascertained its quality, or market demand.

Bill Chalk is long running president of the Chamber of Fruit and Vegetable Industries at the Sydney Markets, where he also has a wholesale business called Southern Cross Produce.

"Now if you were to negotiate a price with all these growers before you started to sell; my staff started at 3am and the buyers are in here trying to buy, what time do we negotiate the price and how do we do it?" he asks somewhat rhetorically.

But it's more than the failure to deliver a price early.

For the growers it's also about the confusion of whether at Sydney Markets, they're dealing with agents or merchants.

Apple grower Guy Gaeta believes the biggest problem is merchants are acting as agents, but not declaring their service fee as a commission, and therefore not paying GST.

"If you're acting as a wholesaler, you should be purchasing the crop, within a certain amount of hours, you should be telling the grower what you're paying," says Mr Gaeta.

So growers should be getting a receipt.

"They're not doing that. They're telling them, a week later, they send em a fax, of what they sold them for, but when the paperwork is done they don't show the 10 per cent as if they're working as an agent," says Guy Gaeta

But if that's the case, why isn't the tax office cracking down?

"They're scared," he says.

Bill Chalk does agree with the fruit growers that the Horticultural Code, that was drawn up during the Howard Government, is a "dog's breakfast.... no one practical person sat down to work this out.

"How would you like to be on the phone at 2am negotiating a price, and you don't agree."

The produce "just sits here."

It's 5am at Sydney Markets and already wholesale merchants, have been there for up to three hours.

It's a dangerous place to walk around, as the 700 forklifts buzz around and despite laws to the contrary, presume right of way.

Bill Chalk explains this market is big and complex.

"30 per cent of the population of Australia gets its fruit and vegetables through Sydney Markets somehow.

With 5,000 workers, "Sydney is the largest market in the Southern Hemisphere, the second-largest in the world, and the largest privately owned market in the world."

Wholesale markets like this in Sydney; in Brisbane, Melbourne, Adelaide and Perth are the key distribution point for almost all Australia's horticulture.

It's where retailers large and small, processors and the food industry come to buy fruit and veg for us, the consumers.

Bill Chalk says boxes arrive from many suppliers, of varying quality and there'd be endless paperwork if receipts were to be written.

"I"ll say this - they don't understand the practicalities. In your mind, you think it's quite simple, don't you.

"Well I'll show you this, I've never thought of this, I'm running off the cuff here, there's one, two, three, four different producers on that pallet. So I've got to write four different receipts?"


But back on the farm, there's mistrust about the markets, and the pricing system.

Peter Darley has 25,000 apple trees - of the most popular varieties, on the rolling hills in the central-west NSW.

He's been lobbying for changes for 11 years.

"It doesn't matter what state you are, I think the key problem in each state is the lack of transparency, in the actual sale price.

"Now if you were to actually go and buy a motorcar, you'd ask the price you're going to get for it, or if you were selling it you wouldn't sell it without first getting a price.

"But as horticultural producers we consign produce to that market and we don't know what we're going to get for it.

"They operate under a merchants' agreement. Now a true merchant must give the grower a price, the grower agrees to that price, that's fine, the wholesaler can then go on, and make a mark up on that produce and make a profit himself.

"He's doing that now without setting a price with the grower."

He says it takes at least five days to get a price out of the wholesale merchant.

Peter Darley is on the Horticulture Taskforce, to try to modify the Horticulture code that was introduced under the last government.

He says the lack of transparency is "decimating the industry. We just can't operate anymore.

"The price we've seen in the last few weeks, the prices retailers are charging and the low price farmers are receiving, somewhere in the middle, is it price gouging by the retailer or is it price taking by the wholesaler? Because there's no transparency in there, no one knows."

Peter Darley says the problems go back eleven years, before there was any code.

"The government brought in voluntary retail grocery code, that was never very successful.

"Next the government brought in mandatory code, but it only covers wholesalers, (and it should cover everybody.) retailers, processors, exporters, wholesalers.

"That's one where we agree with the wholesalers.

"That's where we'd look for transparency."

"We've seen retailers charge high prices, pink lady apples e.g are $7.99 ...to $9.99 a kg, but if the grower is receiving $2. to $2.20/ kg, that's about the top price he's receiving. Clearly there's a huge margin that's disappearing out of the equation," says Peter Darley.

The federal independent member Bob Katter has launched his own changes to the Horticulture Code in Parliament, to try to make every transaction transparent.

"Why wouldn't you give the farmer evidence of sale?

"Every other sale that takes place in the world and in this country gets that," Mr Katter told Parliament.

"But the poor old farmer, all he gets is the rough end of the pineapple, Mr Speaker."

Now dubbed the Katter code, not only does it call for transparency and a receipt, it wants a price setting in 24 hours, a payment within 45 days, and the money to be placed in a trust account.

At the moment, the fruit merchant can go broke and the grower wears the whole risk.

It's fuelled by the likes of Makse Srhoj fruit grower in Katter's productive Far North Queensland electorate.

Makse Srhoj says he's been left unpaid for fruit and pumpkins he's sent and Sydney or Brisbane four times in the past eight years.

The worst case was a Brisbane wholesaler went bankrupt.

"It was probably about four years ago, with trading company Benays which involved half a million dollars to about 10 or 12 farmers.

"And how much were you owed?"

"I was owed around about $44,500 actually. I'd delivered pumpkins."

He says both the consumer watchdog ACCC and to ASIC (the Australian Securities and Investment Commission) concluded the amount was too small to chase.

Sydney Markets believe it has far fewer bankruptcies than the wider economy.

Within the past decade the market has run a Credit Co-op to ensure the traders get their money.

President of Chamber of Fruit and Vegetable Industries Bill Chalk says Sydney traders can limit their liability if the retailer they sell to doesn't pay.

But he doesn't see why the co-op should invite growers in.

"Just like any debtor, if for some reason one of the majors defaults, I'd have no way of getting paid either.

"That's part of a business risk. Growers need to do their research. And for the size of the industry this is, it doesn't take long for growers to work out who pays and who doesn't.

"People still get caught, but percentage wise it's whimsical on turnover of payments to growers."

Where to now?

Merchants you meet at the markets believe their relationships with growers are important, and are based on trust.

But for mango and pumpkin grower Makse Srhoj whose been burnt many times, trust is a poor excuse for a lack of transparency.

And Guy Gaeta has his own suspicions of Sydney Markets, which are not being investigated.

"I don't know of too many farmers going around with $400,000 cars.

"You're telling me they're small businesses? We're the small business supplying them.

"We're giving them the wealth and we're not getting our fair share of what truly the fruit has been sold for."

The growers are continuing to lobby the Government to get rid of the old contracts, arguing merchants have too much power.

Katter's code has taken the next step and will be investigated by the House Agriculture Committee. It's called for public submissions.

Bob Katter's trying to force fruit merchants to be more open in their dealings with growers but it's likely to be met with fierce resistance and it's what numerous Government inquiries have failed to do in the past.