AUSVEG chair Bill Bulmer received a phone call from a desperate producer recently that hammered home how the market dominance of Coles and Woolworths was crippling many farm businesses, a senate inquiry has heard.
"A grower rang me only two days ago, who has supplied a certain retailer for 30 years, and (the supermarket said to the grower) 'we'll renegotiate your contract at the start of June as long as you take a $300 a tonne decrease on your product'," he said.
"And he says 'where am I going to go?'
"They know where he is going to go, out of business."
The comments were made at a public hearing of an inquiry established to report on the price setting practices and market power of major supermarkets.
It is one of six probes currently delving into supermarket and supply chain issues.
The industry veteran also told the hearing that the nation is at risk of becoming a net vegetable importer and that the industry was in a low point of despair with many farmers suffering in silence in fear of economic retribution.
"Farmers will not stick their head up above the parapet, quite understandably. They won't come to this inquiry, even though protected by parliamentary privilege, because they will suffer a loss of opportunity or price," Mr Bulmer said.
In his opening statement, Ausveg chief executive Michael Coote asked the committee to help "curtail unethical retailer behaviour towards their fresh producer suppliers" and to address the "power imbalance" that disadvantages vegetable growers who are being forced to "carry all the costs and risks" of production.
He said margin squeeze had dragged "many farmers", also dealing with the ravages of severe weather, surging input and compliance costs, the COVID era, global supply chain disruptions, biosecurity incursions and workforce challenges including increasing labour costs, to "breaking point."
A recently-released Ausveg survey found more than a third of growers were considering leaving the industry. It said in a submission that farmers being forced into "non-binding" or forecast agreements was causing oversupply issues.
The lobby group also revealed it is offering growers "retail negotiation courses."
A part of the syllabus is to teach farmers how to ask supermarkets who make pricing and other promises over the phone - to ostensibly "leave no records" - for the undertaking in writing.
Meanwhile, the National Farmers' Federation said the two major supermarket's pursuit of "super normal" profits while farmers dealt with pricing information asymmetry had created a major power imbalance.
NFF trade and economics general manager Christopher Young said accurate and real time pricing data and increased oversight would make "a real difference" to a farmers' ability to make business decisions and help to establish "good faith" relationships between all stakeholders.
In response to Senator Glenn Sterle asking if the current dynamics were a case of free marketers "letting rip", Mr Young replied that "if the free market was playing out perhaps some of these issues would not exist on the systematic level that they are."
He said appropriate frameworks were needed to let the free market play out, "free of people whose commercial outcomes are being determined by supply chain participants wielding market power unfairly towards them."
The increased transparency would then hopefully see farm gate prices determined by natural commodity swings rather than commercial pinch points.
The inquiry also heard that price transparency regimes have worked in other nations when led and controlled by government and not industry.
However, the NFF and Ausveg are opposed to divestiture of supermarkets, with the latter wanting to avoid "unintended negative consequences" on producers.
Meanwhile, Ritchies IGA chief executive Fred Harrison told the inquiry that supermarket customers were "correct" in thinking market dominance leads to higher prices and less choice.
"I believe Australia's competition laws need to be strengthened - which is why my main message for the committee is - don't let perfect be the enemy of good," he said.
"The perfect being divesture, the good being strengthening merger laws to make it harder for chains to rollout new stores."
He claimed that while the duopoly enjoyed a 65 per cent national market share, new stores were being opened without being put through a competition test, effectively encouraging chains to grow unchecked.
