Grain Industry Association of Victoria president Michael Wood said the Australian grain industry code of practice - developed in conjunction with Grain Trade Australia - would require members to conform to higher standards of integrity at each point in the supply chain, to reassure producers.

"This code demonstrates the grains industry is self-regulating, capable of operating in an ethical manner and endorses best industry practice," Mr Wood said.

The grain industry has been rocked by a series of financial failures by grain buyers. Five grain buying companies, in particular, have faced insolvency over the past eight months.

At a meeting of the GIAV and the Stockfeed Manufacturers Association of Victoria in Ballarat last month, Mr Wood described the fallout following those collapses as "distressing".

"Sellers need to understand who they are dealing with. GIAV members who are also GTA members will be bound to comply with the new code," he said.

The code came into effect at the start of this month. GIAV members will be required to:

- be bound by the provisions of either contract law, government legislation, industry rules or agreed terms;

- communicate grain specifications to suppliers in clear and accurate terms;

- manage misunderstandings and misrepresentation through standard sampling and testing protocols;

- operate a business which is sustainable; and,

- encourage professional development through training.

"None of the companies which have faced financial difficulty over the past 18 months have been members of the GIAV," Mr Wood said.

"While the code is not a financial guarantee, sellers can be comforted that the grain industry is heavily committed to ensure grain transactions can occur predictably to avoid disputes."