Agriculture Minister Ernie Bridge is seeking Crown Law advice on whether growers who supplied produce to the failed United Fruit and Vegetable Growers' Co-operative can expect to receive payment for their goods.
Mr Bridge said a number of growers faced financial ruin if they were not paid.
"These growers are in an extremely difficult situation as they supplied produce to the Co-op to be on-sold to retailers, and are now hearing that money from those sales might be seized," he said.
After meeting today with the president and vice president of the Market Gardeners' Association of Western Australia, Mr Nick Trandos and Mr Tony Frzop, the Minister agreed to investigate what rights growers had in such a situation.
"In particular, we need to determine whether produce supplied on a consignment basis to United can be regarded by the receiver as an asset of the Co-operative," he said.
The Crown Law advice would also cover the deposits growers had paid for crates in which their produce was supplied to United.
Mr Bridge said the Co-op acted as an agent to on-sell produce to retailers, and received a commission for its work.
The Market Gardeners' Association believed the commission was the only part of the money which should be regarded as an asset of the Co-op.
Mr Trandos said his association believed that in keeping with standard consignment stock arrangements, produce and crates supplied to agents were not their property.
"There is several million dollars' worth of consignment stock at stake - assets which we believe are rightfully the property of the growers and not the receiver," Mr Trandos said.
Mr Bridge also undertook to investigate the possibility of a future industry-wide guarantee of a seven-day payment to growers for produce supplied to agents.
He said it currently took about three to four weeks for growers to be paid, and this left them exposed to an unacceptable high risk.
"It is vital that growers' confidence in the industry is maintained, and a seven-day payment provision might be the way to achieve that," he said.
"For that reason, I am keen to have the proposal thoroughly examined."