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From the Paddock to the Plate—A Fair Return for Producers

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From the Paddock to the Plate—A Fair Return for Producers PP 363 FINAL REPORT FROM THE PADDOCK TO THE PLATE—A FAIR RETURN FOR PRODUCERS 97TH REPORT OF THE ECONOMIC AND FINANCE COMMITTEE Tabled in the House of Assembly and ordered to be published on Tuesday 28 November 2017 Second Session, Fifty-Third Parliament CONTENTS 1 ESTABLISHMENT OF THE COMMITTEE .......................................................... 1 1.1 Membership........................................................................................................... 1 1.1.1 Current membership and staff of the Committee ................................................ 2 1.2 Functions ............................................................................................................... 2 1.3 References ............................................................................................................. 3 1.4 Ministerial Responses............................................................................................ 3 2 PRESIDING MEMBER’S INTRODUCTION......................................................... 4 3 RECOMMENDATIONS......................................................................................... 8 4 INITIAL TERMS OF REFERENCE ..................................................................... 11 5 SUMMARY OF ISSUES PAPER AND THE INQUIRY’S FINAL TERMS OF REFERENCE........................................................................................................ 12 5.1 Occurrence and Effect of Unfair Contractual Dealings and the Inequitable Bargaining Power................................................................................................ 12 5.2 Barriers Preventing Producers from Entering Larger Supply Chains ................... 13 5.3 Production Costs.................................................................................................. 13 5.4 Federal Codes of Conduct ................................................................................... 14 5.5 Update into whether the Essential Services Commission of SA has Reviewed the Grain Supply Chain............................................................................................. 14 6 INQUIRY OVERVIEW ........................................................................................ 15 6.1 Introduction ......................................................................................................... 15 6.2 Scope of Inquiry .................................................................................................. 15 6.3 Defining the Relevant Sectors.............................................................................. 15 6.4 Aim of Inquiry..................................................................................................... 16 6.5 Background Issues............................................................................................... 16 7 REPORT SUMMARY .......................................................................................... 17 8 INEQUITABLE COMMERCIAL POWER........................................................... 18 8.1 Introduction ......................................................................................................... 18 8.2 Inequitable Bargaining Power.............................................................................. 19 8.2.1 The supermarket industry and the impact on bargaining power ........................ 23 8.3 Unfair Commercial Dealings ............................................................................... 34 8.3.1 Legislative protections ………………………………………………………..35 8.4 Potential Solutions to Prevent the Inequitable Bargaining Power and Unfair Commercial Dealings of Primary Producers........................................................ 39 8.4.1 Co-operative business models .......................................................................... 45 8.4.2 Collaborative initiatives ................................................................................... 48 8.4.3 AlmondCo case study ...................................................................................... 52 8.4.4 Regulatory and legislative barriers to co-operatives.......................................... 53 9 BARRIERS TO LARGER SUPPLY CHAINS ...................................................... 57 9.1 Introduction ......................................................................................................... 57 9.2 The Commercial Practices of Large Retailers and their Effect on the Four Ps ...... 59 9.2.1 Quality requirements........................................................................................ 60 9.2.2 Availability requirements................................................................................. 68 9.2.3 Competitive pressures……………………………………………………………72 9.3 The Role of Farmers’ and Produce Markets in Addressing these Barriers............. 73 9.4 Commercialisation of Products and the Benefits of Supporting Local Producers.. 80 9.5 Other Barriers ...................................................................................................... 84 10 COSTS OF PRODUCTION .................................................................................. 89 10.1 Introduction ......................................................................................................... 89 10.2 Cash Flow Problems ............................................................................................ 89 10.3 Pricing Issues....................................................................................................... 90 10.4 Setting Minimum Prices for Produce ................................................................... 93 10.4.1 Reasons for minimum prices for some produce ............................................ 95 10.4.2 Reasons against minimum prices for grapes ................................................. 99 11 CODES OF CONDUCT...................................................................................... 102 11.1 Introduction ....................................................................................................... 102 11.2 Legislative Overview......................................................................................... 102 11.2.1 Case study showing the enforcement approach of the ACCC ..................... 105 11.2.2 The differences between voluntary and mandatory codes of conduct.......... 107 11.2.3 The differences between the Horticulture and Grocery Codes of Conduct.. 108 11.3 Evidence Received Regarding these Federal Codes of Conduct ......................... 114 12 GRAIN SUPPLY CHAIN ISSUES ..................................................................... 121 12.1 Introduction ....................................................................................................... 121 12.2 Review of the Entire Grain Supply Chain .......................................................... 122 12.2.1 Summary of the State’s Select Committee on the Grain Handling Industry 122 12.2.2 Update regarding ESCOSA’s review of the entire grain supply chain......... 123 12.3 Summary of Evidence Received from Stakeholders ........................................... 125 12.3.1 Inequitable bargaining power ..................................................................... 125 12.3.2 Barriers in transitioning into larger supply chains....................................... 129 12.3.3 Supply chain issues .................................................................................... 133 APPENDIX 1 LIST OF WRITTEN SUBMISSIONS....................................................... 139 APPENDIX 2 LIST OF HEARINGS ............................................................................... 141 APPENDIX 3 RECOMMENDATIONS FROM SELECT COMMITTEE ON GRAIN HANDLING INDUSTRY………………………………………………………………….143 APPENDIX 4 GLOSSARY ............................................................................................. 146 APPENDIX 5 BIBLIOGRAPHY ..................................................................................... 147 1 ESTABLISHMENT OF THE COMMITTEE 1.1 Membership The Economic and Finance Committee (‘the Committee’) is established under section 4 of the Parliamentary Committees Act 1991 (SA). Section 5 states that the membership of the Committee is to comprise seven Members of the House of Assembly. A Minister of the Crown is ineligible for appointment to the Committee. Members of the Committee are appointed under section 20 of the Parliamentary Committees Act 1991 (SA), and cease to be members pursuant to section 21 of this same Act. The seventh Economic and Finance Committee was appointed by the House of Assembly on 6 May 2014, following the State Election, held on 20 March 2014. The following Members were appointed to this seventh Committee: Mr Lee Odenwalder MP; the Hon Paul Caica MP; the Hon Iain Evans MP; Mr Martin Hamilton-Smith MP; Ms Katrine Hildyard MP; Mr Chris Picton MP and Mr David Pisoni MP. • On 15 May 2014 Mr Lee Odenwalder MP was nominated as the Presiding Member. • On 27 May 2014 Mr Martin Hamilton-Smith MP resigned from the Committee. • On 17 June 2014 Mr Dan van Holst Pellekaan MP was appointed to the Committee. • On 30 October 2014 the Hon Iain Evans MP resigned from the Committee and Parliament. • On 30 October 2014 Mr David Speirs MP was appointed to the Committee. • On 10 February 2015 Ms Katrine Hildyard MP resigned from the Committee. • On 10 February 2015 the Hon Jennifer Rankine MP was appointed to the Committee. • On 27 January 2016 Mr Chris Picton MP resigned from
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