Grain growers - have you heard of the Australian Small Business and Family Enterprise Ombudsman and how the office might be able to help your grains business?
Ms Kate Carnell (see Profile below) was appointed to this role when the office was launched in March last year. After 12 months of operation, the Ombudsman has notched up more than 3000 enquiries from small businesses seeking assistance and advice. And while it seems many farmers aren’t aware of the Ombudsman’s role, it is a great resource for farmers who have concerns, among other things, about their dealings with banks, the ATO, customers’ payment terms, contracts, phoenix operators and red tape.
GrainGrowers spoke with Ms Carnell to find out more and asked these questions about issues in the grains industry and how the Ombudsman’s office might be able to help.
Profile - Kate Carnell
Kate Carnell commenced her role as Australian Small Business and Family Enterprise Ombudsman (ASBFEO) in March 2016. Kate brings extensive experience and knowledge to the role of Ombudsman, having run her own small businesses for 15 years before becoming ACT Chief Minister in 1995 for five years.
Before her appointment as the inaugural ASBFEO, Kate was CEO of the Australian Chamber of Commerce and Industry, which represents more than 300,000 businesses across Australia. She has also served two years as CEO of beyondblue, four years as CEO of the Australian Food and Grocery Council, four years as CEO of the Australian General Practice Network (AGPN) and three years as CEO of the National Association of Forest Industries (NAFI).
Kate is a pharmacist by profession and was the inaugural chair of the ACT Branch of the Pharmacy Guild of Australia and the first woman to become the National Vice-President of the Pharmacy Guild of Australia.
She was appointed an Officer of the Order of Australia in 2006 for her services to the community through contributions to economic development and support for the business sector, knowledge industries, the medical sector and medical technology advances.
Many farmers haven't heard about the Small Business and Family Enterprise Ombudsman. Could you explain your role?
We provide small businesses and family enterprises, including farmers, with assistance if they find themselves involved in a dispute. We also provide a voice to ensure the concerns and ideas of small business people are heard by lawmakers at all levels so that beneficial policies and regulations are put in place.
The work involves consulting and gathering feedback from a diverse range of stakeholders, advocating for policies and legislation, shaping the public debate and supporting measures designed to make the lives of small business owners that little bit easier. Since launching in March 2016 we’ve received more than 3000 enquiries seeking assistance and advice.
Do you deal with farmers? What kind of work have you already done with agricultural businesses?
We deal with farmers quite a lot because most are small to medium businesses and often family enterprises as well. So far we have predominantly worked with dairy farmers in relation to issues with Murray Goulburn. We’ve also done a lot of work on behalf of agricultural businesses in their dealings with banks. We know that primary production can be a volatile industry and banks can sometimes be inflexible. We’re able to help with that. We’ve also done work with the ATO on behalf of farmers, where they are having cashflow problems, to help with payment schedules, and we’ve found the ATO to be very supportive.
You've recently undertaken an inquiry into payment terms. What were the main findings? How are they relevant for grain farmers? A major problem for farmers is the time lag from delivering grain to getting paid, particularly from small to medium sized traders. What can the ombudsman do to assist?
The main finding was that big multinational businesses tend to pay smaller businesses slower and those timelines were blowing out. We found there was a particular problem with large food and beverage manufacturing businesses and many grain growers would be exposed to that if they’re supplying to those entities.
We work with many small businesses to ensure they get paid in a reasonable time. We do that by direct contact with senior management, by utilising our powers to require documents and to facilitate professional mediation.
What advice would you give grain farmers about contract terms? What should we watch out for? How can you identify if a contract term is unfair? Do you work with the ACCC on these types of issues?
Unfair contract term (UCT) legislation came into law on 12 November last year. The legislation was passed about 12 months prior so there was plenty of time for big business to make sure that their contracts are compliant, but unfortunately a number didn’t do it.
Any multi-year contract worth less than $1 million or a single contract worth less than $300 000 is covered by the legislation. As of last November, large companies can’t give small businesses standard contracts that have in them unfair clauses. An unfair clause is one that allows one party, the big guy, to alter the contract in a way that impacts badly on the other party. It stops them changing the price, changing the timelines, acting in a way that causes damage to the other party where they have no option but to comply. Automatic rollover clauses can also be unfair. It’s really important for smaller operators to have a good read of their contracts. Many don’t read them because they believe they don’t have a choice anyway. That may have been true once, but the legislation gives them a level of power to demand clearer contracts.
The ACCC is the responsible entity for enforcement of the UCT legislation and my office is working closely with them on compliance. If people think they have a clause that might be unfair they can call us or get in touch with the ACCC.
In the grains industry, especially around harvest, there have been instances of grain traders going out of business (owing money to growers for grain), only to start up again under a different trading name. Is the Ombudsman looking into these kinds of practices and what can you do to help ensure only reputable businesses are trading?
Phoenixing is a problem across the board, especially in the construction industry, agriculture and the labour hire industry. The Federal Government set up a phoenixing taskforce and we’re working closely with ASIC on ways to stop the practice. They’re moving towards setting up a director’s identification number as an effort to identify directors involved in setting up and closing down multiple companies. We’re very supportive of that approach.
That said, there are things that individuals can do to make sure they’re paid:
- Make sure you bill regularly
- Don’t send a bill and wait three months
- Follow up the moment an invoice is late.
It’s important to have good processes in place, because if a company is going to phoenix, you need to make sure you’ve been paid. You can only do that by vigilance.
If a problem happens, it’s important to get in touch with us quickly. The capacity to get your money is much greater if we start the process early. It’s also sensible to check the credit references of companies you plan to sell to.
Red tape is a huge problem in agriculture. Apart from the sheer number of regulations, and the time and cost involved in dealing with these, it's often very difficult to work out which agency or level of government is involved and which takes precedence. Do you see it as your role to make it easier for small businesses, as many farms are, to be able to operate without the red tape?
This is a problem right across the small business sector. We know from research it can take businesses up to 11 hours per week to comply with various levels of government regulation. We all know it’s not one regulation, one law or one level of government; it’s all of them together.
Our job is to work with the Federal Government and small business commissions in the states to cut the level of regulation down. To do that we need to know from people on the ground which regulations are really driving you mad.
There is currently a national business simplification program under way, led by the Hon. Craig Lundy MP, to reduce red tape across levels of government, focusing on individual industries.
It’s important for the grains industry to identify the big issues with red tape and talk to us about it.
If a farmer has a business problem or situation they want to discuss with you, how can they get in contact with the Ombudsman?
For dispute support visit the website or call the information line on 1300 650 460.
The State of the Australian Grains Industry report was first published by GrainGrowers in 2011. The purpose of the Report was to review the industry post the deregulation of wheat export marketing and to outline the priority actions required to advance the interests of growers in an internationally competitive market. The report also successfully established a basis for evaluating the industry and opportunities in future reports. Five years on, the 2016 edition builds on the original report by refl ecting on progress towards capturing the opportunities outlined in 2011 and identifying the challenges faced by Australia’s contemporary grains industry. Although developed by GrainGrowers, it is intended that the report be used industry wide, as a useful ready-reckoner to Australia's great grains industry.
Click here to view State of the Australia Grains Industry: 2016 report
MANAGING RISK IN GRAIN CONTRACTS - a gROWER'S GUIDE
Almost $45 million has been lost to the Australian grain production sector over the last two years, due to a range of trader insolvencies. Grain producers, through their trade contracts as well as their wider marketing strategy, can reduce counter party risk by implementing strategies.
GrainGrowers has released a 'Managing Risk in Grain Contracts - A Grower's Guide'
The guide is a practical tool to assist GrainGrowers’ members to manage counter party risks in their dealings with traders or buyers and has been developed in consultation with legal experts on the PPSR (Personal Property Securities Register).
Click here to read the 'Managing Risk in Grain Contracts - A Grower's Guide'
STATE OF THE INDUSTRY REPORT 2011
GrainGrowers compiled the State of the Industry report in 2011 to provide a detailed analysis of the state of the Australian grains industry three years after deregulation.
The report outlines the prospects for the grains industry at the time and the priority actions required to advance the interests of producers in an internationally competitive environment.
The report covered issues pertaining to storage, handling and transport, wheat receival standards and variety classification, productivity, competition, risk management and marketing are all addressed in the report.
Download the State of the Industry Report