Relief for chicken farmers as country’s biggest processors agree to fix unfair contracts

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The Australian Competition and Consumer Commission (ACCC) has wrangled concessions from the country’s biggest chicken meat processors to make some of their contracts with farmers fairer.

The $3 billion industry is dominated by two big companies, with Ingham’s and Baiada Poultry supplying about 70 per cent of the chicken meat in Australia.

The ACCC said the companies held too much power and the contracts could cause “significant financial harm to growers”.

The body was asked in 2020 to conduct an inquiry into bargaining power imbalances in supply chains for perishable agricultural goods in Australia, and came up with its report later that year.

The processors have now agreed to make changes to contracts to clarify the circumstances in which they may require growers to upgrade farm facilities, and when processors could make changes to their grower manuals.

A cute small yellow fluffy chick being held by a pair of hands.A cute small yellow fluffy chick being held by a pair of hands.
Some chicken producers are supplying to processors without any contract.(Supplied: Australian Chicken Meat Federation)

Sudden changes to grower manuals could include things like changing bird density requirements in a shed, leading to cost blowouts for growers.

The processors have also agreed to provide clarity about the circumstances in which processors can impose additional costs on growers, and to balance notice periods for termination clauses.

Chicken farmers’ troubles don’t end there

But NSW Farmers’ Poultry Committee chair Peter Wojcicki said there were other problems growers had with the prevailing situation. 

One of the big ones is variability in the growing fee between states and even between processors.

He said farmers would like to see some consistency in pay for doing the same work.

Mr Wojcicki said contract terms had varied too.

“They used to be seven-year contracts, then that became five-year contracts,” he said.

Mr Wojcicki said there had been an exodus from the industry, with 20 to 30 per cent of poultry growers leaving over the past four to five years.

He said he hoped to see more transparency and accountability in the contracts between grower and processor, because “at the moment they are secretive” and poultry growers were in a weak position.

“And because the farmers want to hang on to the contract, hang on to their farms and their income, they’re too scared  to say anything about them.”

What happens now?

ACCC deputy chair Mick Keogh said some progress had been made in gaining concessions from the processors, which was a “good start”.

Chickens in a growing shed.Chickens in a growing shed.
Almost a third of poultry producers have left the industry in the past five years.(Supplied: Australian Chicken Meat Federation)

He said current laws allowed for illegal clauses in contracts to be voided, but it was a process that was out of reach for many farmers.

“The way the law is written at the moment, there’s no penalty associated with having an unfair clause in your contract,” Mr Keogh said.

“What can happen though is a court can declare that clause void.”

But the process is detailed, lengthy, and there is potential for delays in court.

Mr Keogh said the ACCC instead sat down with the processors and encouraged them to remove the clauses in question, voluntarily.

Proposed reforms to contract law — broadening its application and imposing penalties for unfair contract terms — were tabled in Parliament just before the election.

Mr Keogh said all indications were that the incoming government was inclined to proceed with those reforms. 

Ingham’s and Baiada Poultry have been contacted for comment.