Export Forum acts to protect producers New ‘Code of Conduct’ gets unanimous thumbs up

Ray Smuts EXPORTERS have endorsed a new Fresh Produce Exporters’ Forum Code of Conduct to foster “honest and lawful business practices” in the industry. Built into the revised Code, which has the backing of around 62 exporters responsible for 90% of total export volumes, is a proviso which seeks to act much like a safeguard for producers once their product has left the country. Forum CEO Stuart Symington says all members acting as agents for others are required to open a non-statutory producer trust banking account to house only those monies repatriated from overseas clients for consignment business. “The reason we have separated that account from the exporter’s business account is that in the event of him being liquidated the court can see quite clearly that those monies belong to someone else, namely the producer.” Another requirement is that there should be a clear audit trail on the producer trust account, supplied to the Forum in writing by the auditors of exporter members. A very important link to the producer trust account is a marketing agreement between exporter and producer in which specific reference is made to the producer trust account in the event of consignment business being undertaken. Symington believes the importance of such an agreement is underscored by the fact that so many operators have in the past done business without an agreement, resulting in the collective loss of millions of rand. He is aware of two Cape producers suffering huge losses last year by trying to deal directly with an importer. The transactions turned sour when the overseas buyer was liquidated. “Some producers are tempted into believing they will have more money in their pocket if they go direct - cutting out the exporter - but there is a very high price in dealing with people you are unsure of, so the producer has to ask himself whether the risk is worth it. “Unfortunately a lot of people, particularly producers, still do not understand that but we are making a great effort to educate them.” The producer trust account is not only a ‘defence mechanism’ for producers as the Forum acts in other ways too. Some 20 producers complained to the Forum about non-payment by exporters and they (the exporters) were asked for a written response in order to determine whether a solution could be reached or whether it would be necessary to engage in mediation or arbitration. So far, the Forum has been involved in 20-odd mediations, all but one of which have been resolved, and one arbitration in which an exporter was ordered to pay a substantial amount to a producer. (An arbitrator’s decision is final). Symington makes the point that in some instances it suits a producer not to sign a contract with an exporter because he may well obtain a better deal at a later stage.