Farming groups have accused the major supermarkets of using their power to distort the market, leading to elevated prices for shoppers and low prices for producers.
The claim comes amid falling global prices for agricultural goods that have failed to dent grocery bills, and growing scrutiny of supermarket pricing practices through newly announced federal and state parliamentary inquiries.
Xavier Martin, the president of the NSW Farmers Association, said the food retailing market was not functioning properly, and that the major supermarket chains were too big.
“We need to have mandated rules of fairness,” Martin said.
“There’s no doubt more equitable and fair pricing would work well all round, but these unfair trading practices distort the market.
“They’ve been unfair to farmers with their pricing and they’ve been unfair to consumers with their pricing and we’ve got to break them up if they will not behave.”
Coles and Woolworths dominate Australia’s supermarket sector, with a combined control of two-thirds of the market. Aldi is the next biggest, with just over 10%.
There has been a revitalised political interest in supermarket practices coinciding with furious criticism by farmers that falling produce prices last year did not result in comparable price cuts for their products on supermarket shelves.
Lower supermarket prices for meat and other produce would typically lead to increased purchases, resulting in higher prices for farmers.
Farming groups AgForce and the National Farmers’ Federation have also expressed concerns at supermarket pricing decisions and what they say is a widening gap between wholesale and shelf prices.
The country’s major grocery retailers have defended their pricing decisions, and say they are committed to helping Australians with cost-of-living pressures. They say that they have long-term relationships and contracts with the farming sector that do not reflect volatile saleyard prices.
A Coles spokesperson said the supermarket was working hard to keep prices affordable.
“There are many factors which determine both the retail shelf price of produce and meat, and how long an item is on promotion,” the spokesperson said.
A Woolworths spokesperson said saleyard prices don’t reflect the reality of the company’s supply chain.
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“Cattle markets are prone to swing up and down sharply over short periods of time, with the cattle market price indicator already shooting up 60% from its lowest point three months ago,” the spokesperson said.
The UN’s food price index, which measures global prices of agricultural goods, ended last year about 10% below 2022 levels, led by falling costs for meat, dairy, cereals and vegetable oils.
Australia’s food inflation is running at an annual rate of 4.8%, however the figure represents the prices charged by grocery retailers, and not the wholesale price of food, given it is derived from supermarket scanner data.
Guardian Australia analysis has consistently shown supermarkets expanded their profit margins during the pandemic and inflationary period after more than accounting for the increased costs of running their stores.
Coles and Woolworths have argued their profits are not excessive and that they balance the needs of customers and suppliers, as well as being major employers.
The major chains are now facing several investigations, including an upcoming Senate inquiry and, separately, a Queensland parliamentary inquiry. Former Labor minister Craig Emerson is also leading a review of the grocery conduct code which governs how the food retailers deal with suppliers and customers.
The Queensland premier, Steven Miles, said on Friday the supermarkets had agreed to share more pricing information with the state, and that information would be made public, declaring that “transparency and scrutiny” were the first steps to helping farmers and consumers.
Farming groups have also called for an investigation by the competition regulator to test whether the sector is operating as a competitive industry should.
Overseas governments have used a combination of competition investigations, pricing inquiries and threats of price controls, sanctions and divestments to pressure supermarkets in recent months, amid growing angst over the rising cost of groceries.
