Farmers at the mercy of supermarket giants as cost-of-living pressures pile on are calling for an inquiry into the sector rather than the already-announced government review.

The weekly grocery shop has continued to balloon, costing $37 more than the previous year, but NSW Farmers president Xavier Martin says those price increases are not moving up the supply chain which has forced producers to foot the bill.

“Farmers are still receiving the same dysfunctional prices for their produce as they did when input costs were far lower,” Martin said.

“(They) are being offered increasingly lower prices that often don’t cover their cost of production, with little justification and a ‘take it or leave it’ attitude from supermarkets”, he added.

Anti-competitive behaviour by supply chain middlemen, Martin says, has also forced farmers into being locked in with one buyer with some reporting that their produce has been rejected when buyers discover they are supplying other businesses. 

Consumer are also struggling with many finding it difficult to put food on the table while Coles and Woolworths recorded billion-dollar profits in 2023.

Because of this, NSW Farmers has called on the Australian consumer watchdog to launch an inquiry into the sector for the benefit of farmers and shoppers.

The government has already announced a review of the Food and Grocery Code, to which the supermarkets are signatories, that will be headed by former Labor minister Craig Emerson.

But Martin says this isn’t enough.

The code only covers a small fragment of the grocery supply chain and a review would not be able to delve into issues like price transparency and “excessive profits gained through price gouging”.

The review would also rely solely on verbal testimony from stakeholders whereas an investigation by the Australian Competition and Consumer Commission would be able to analyse prices consumers are charged, the amount paid to suppliers and costs to supermarkets which Martin says is desperately needed.

“Failure to properly review these issues via the ACCC will likely force more farmers to exit the industry and lead to a reduction in food and fibre supply, further magnifying the rising food costs we are seeing today,” he said.

On Wednesday, the National Farmers’ Federation initially welcomed the government’s review, hoping it would give the code the teeth needed to fix a system failing consumers and farmers.

The group’s president David Jochinke called on the review to adopt a recommendation from an ACCC inquiry that would make the Food and Grocery Code of Conduct mandatory, prevent retailers from outsourcing important parts of the agreement and introduce penalties for breaches.

He also urged the government to go further to fix Australia’s competition issues.

-AAP