Standard Contract

National President of the Australian Fertiliser Services Association (AFSA) Wes Wheelhouse announced that a new Standard Contract for the fertiliser industry has now been made available.

Fertiliser Contract Adds Clarity to a Volatile Industry.

National President of the Australian Fertiliser Services Association (AFSA) Wes Wheelhouse announced today that a new Standard Contract for the fertiliser industry has now been made available.  The AFSA has been working on the development of the fertiliser contract for two years with the Fertilizer Industry Federation of Australia (FIFA).

Mr Wheelhouse said “the development of the contract was in direct response from AFSA members requesting a system that offered clarity on agreements they reach with their farmer customers and also their suppliers.  With the increase in value of fertiliser transacted by members and farmers both parties have become increasingly uncomfortable with existing arrangements, these agreements varied from a verbal agreement in some cases to a formal contract arrangement in others and each having differing rules governing them.  AFSA members wanted the option of using a more formal documentation process that gave participants a very clear understanding of the arrangement they have entered into.  The advantage of the industry Standard Contract is that the rules that govern the contract are standard across the industry making it easier for participants to understand the arrangement”.

“Since 2008 the volatility in pricing and supply has been at levels not seen before in the fertiliser industry, this potentially leaves participants exposed to major losses if things go wrong and agreements in place at the time in many cases left many customers and suppliers unhappy with interpretations of what had and had not been agreed.  The standard contract sets out very clearly the rights and obligations of each party and also importantly the remedy should things go wrong.  Many of these less formal agreements are fine until something goes wrong, any agreement needs a robust process that will enable a deviation from the agreement to be remedied, and the Standard Contract provides this.”

The Standard Contract specifies that where parties are not able to resolve contract disputes they will be settled by arbitration.  The Australian institute of Arbitrators and Mediators have developed provisions for arbitration in the Australian Fertiliser Industry to provide a cost effective resolution of any disputes.

Mr Wheelhouse said “whilst it does have the arbitration provision to resolve disputes the reality is if there are issues most parties find a solution before it becomes a dispute without resorting to arbitration, however it’s critical to have an agreement with provisions available for those few cases where it may be needed”.

“To ensure the Standard Contract was fair to both the buyer and seller the development process involved consultation from all areas of the fertiliser industry including suppliers, retailers and farmer bodies”.

Mr Wheelhouse said “the reality is our members enter into agreements with their suppliers as a buyer and then enter into agreements with their customers as a seller, so it was critical that when we developed this Standard Contract we had a contract that can be used in both situations and that’s what we have achieved”.

The Standard Contract Form, Fertiliser Industry Trade Rules and IAMA Provisions for Arbitration in the Australian Fertiliser Industry are all available at the AFSA website www.afsa.net.au

Contact Wes Wheelhouse 0400 373020        wes@wheelhouse.com.au

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