Who pays the price of compliance?
Growers are increasingly facing an expanding mix of regulatory requirements, audits, certifications and reporting obligations – many of which come with costs they’re expected to absorb.
We all understand the need for safe food, responsible production and ethically sourced produce. This isn’t about lowering standards or scrapping rules. But there’s a difference between necessary oversight and a system that keeps adding requirements without considering the cumulative cost.
In our recent submission to the Senate Select Committee on Productivity in Australia, QFVG put some numbers around this issue. Using Coles Group’s reported 346 ethical audits of fresh produce suppliers, QFVG estimated audit fees and growers’ time could add up to around $2.3 million a year. This is an illustrative estimate based on reported audits and QFVG’s cost assumptions.
That’s an estimated $2.3 million borne by growers to meet one retailer’s reporting requirements. It doesn’t include the costs of other food safety, packaging, product specification or assurance requirements, or the similar obligations imposed by other retailers.
The Modern Slavery Act 2018 is one example of how reporting obligations can shift costs down the supply chain. The Act imposes reporting responsibilities on large companies (turnover >$100 million), but the burden of meeting those responsibilities flows down to the small and family-owned businesses that supply them.
The problem arises when legislation is introduced without considering the broader impacts across the economy. Governments are supposed to measure these compliance costs in a regulatory impact statement (RIS) before legislation is enacted. But in this case, the indirect impact on growers was not measured at all. The RIS for the Modern Slavery Act only considered the cost to Coles and 2,999 other large companies of producing one annual report a year. It didn’t measure the cost to their suppliers for gathering that information.
In effect, growers are bearing the cost of meeting requirements that larger companies are responsible for. They pay the audit fees, commit staff time and manage paperwork, often without receiving anything in return.
Every dollar spent meeting these requirements is a dollar that can’t go towards new equipment, improving farm efficiency or managing weather-related risks. Every hour spent preparing paperwork or undergoing audits is time taken away from running and improving the business.
Those imposing new requirements need to take responsibility for the costs they create. Growers shouldn't be expected to fund someone else's reporting obligations or absorb the cost of meeting standards set by others without any recognition of the time and expense involved.
