The competition regulator has launched legal proceedings against Landmark Operations Limited, which trades as Seednet, in relation to its variety of barley called Compass.
Barley is a key ingredient in many foods, from beer and whiskey to breads and cereals, and is also used in animal feed.
According to AgriFutures Australia, the nation produces millions of tonnes of barley each year at a gross value of some $2 billion.
Seednet, which has a licensing agreement to distribute Compass to farmers and retailers nationwide, marketed the barley as producing better straw, with improved disease resistance and was better suited to early sowing than its older variety, Commander.
According to the Australian Competition and Consumer Commission (ACCC), Seednet made these claims from at least December 2014 to December 2016, despite receiving information prior to that time that such claims did not stack up.
The company also claimed throughout 2016 that Compass had higher resistance to leaf rust disease, despite the National Variety Trials program rating it as being very susceptible in January 2016.
The ACCC’s action comes as farmers across NSW and large parts of Queensland are suffering through one of the worst droughts on record, and retailers have struggled to remain profitable amid low wage growth.
“We allege that Seednet knew, or ought to have known, that its representations in relation to Compass’ straw strength and leaf rust resistance were incorrect, but that it did not amend its fact sheet to correct these representations,” said ACCC deputy chair Mick Keogh.
Mr Keogh said that misleading marketing claims are a particular problem for farmers, as discrepancies in actual returns can be the difference between profit or loss on any given crop harvest.
“Without correct information, they assume, or are incorrectly advised, that other factors such as the weather are to blame when crops don’t succeed or perform in the way that has been represented by suppliers,” Mr Keogh said.
“The sad fact of the matter is farmers often don’t have the time or money to pursue seed companies when products fail or don’t work in the way they should.”
In a statement, the company said it is “currently reviewing the ACCC's claims”.
“As this matter is now before the Federal Court, we are unable to make any further comment on the allegations,” it said.
“We wish to stress, however, that the ACCC’s allegations relate to certain statements made by Seednet, and in no way relate to the overall performance of Compass itself. Compass has recently achieved malt accreditation and is one of the highest yielding varieties of barley on the market across Australian barley growing regions.”