The new horticultural code of conduct is shining light again on our fresh produce supply chains and the way our marketplace functions. Here we look at the true value of market transparency and regulation in our fresh produce supply chains and how these can be amplified in a digital marketplace.
Our peak national regulator has made some very strong statements about the need for fair trade practices for both growers and traders :
“The Code is designed to offer new protections for growers and traders. The revised Code aims to address much of the commercial uncertainty that has existed for many years in these markets, and which numerous inquiries and reports have identified,” Mr Keogh, the Commissioner for the ACCC, said. “…businesses are now on notice that ensuring compliance with industry codes, including the Horticulture Code, is a priority for the ACCC.”
These are strong words from the ACCC but in a way, they shouldn’t really be necessary. The economic reality is that regulation and market transparency when applied correctly works better for everyone, here are three reasons why:
Informed Decisions: When information is not transparent, stakeholders making investment decisions (about what to grow – where to sell) do so with imperfect information. This means resource allocation is also imperfect and the result is waste, poor productivity outcomes, and at an industry level loss of economic value. If you subscribe to the view that what is bad for the industry is bad for the individual, then practices that hinder the flow of information are bad for everyone. Trading systems should enhance economic value for market participants by bringing needs and solutions together in a way that is best for buyer and seller. This is especially true for a resource like fresh produce, which has limited supply and shelf life.
Competitive Advantage: Our regulatory framework is our intellectual property. It outlines a set of business rules we designed to make our industry perform better and deliver better product to consumers. Our regulations and food handling procedures give our producers a competitive advantage in more globalised markets. At the HiveXchange, we have had direct feedback from international buyers that they see our regulations and certifications as proof statements of our ability to deliver quality produce.
Workflow Innovation: Concerns have been raised that regulation drives up compliance cost, and this has a negative impact on the industry. In our view, this concern does not recognise that there already are significant compliance and administrative costs in our supply chains. Part of the reason for those costs is duplication – > duplication of contracts, workflow designs, paperwork etc. At the HiveXchange we offer market participants the opportunity to use a single platform and workflow to manage multiple relationships. We have also created a business model to automate compliance with the new code of conduct. This approach can reduce compliance overheads, while increasing transparency.
Digital marketplaces move information and value seamlessly, at low cost, in real time. We are only at the beginning of a revolution in the fresh produce industry, that will see digital technologies work with regulators, certifiers, and information providers to grow margins and gross value in our supply chains.