Farmers have been unfairly treated by Australian supermarkets, a new report has confirmed, with calls going out for serious reform to our country's competition laws.

The report, written by former ACCC chief Allen Fels has confirmed what many have been alleging about Australia's major supermarkets - price gouging.

Professor Fels uses the analogy of 'rockets and feathers' in his report to describe the behaviours of those at the top of the supply chain, who have been raising prices like rockets after experiencing an upward price shock, but when the reverse occurs, prices fall like feathers.

The report also found that supermarkets have been exercising excessive market power over farmers and other suppliers.

NSW Farmers President Xavier Martin signalled that such a damming report means that serious competition reform "must be set in motion."

"The finding of this inquiry only strengthen our case that serious and intensive reform is necessary within our nation's supermarket sector if fair prices for farmers and families are to be achieved."

"For too long this staggering lack of competition in the sector has enabled the major supermarkets to exercise unfair market power over farmers and suppliers, leaving them with pitiful prices as profit margins increase."

"Professor Fels’ report clearly states that supermarkets have continued to drive their own profits up while failing to increase the prices farmers receive for their product at the farm gate."

President of the National Farmers Federation agrees supermarkets have been giving farmers a rough go.

"In the middle of the pandemic, during a period of skyrocketing input costs, one of the major supermarkets wrote a letter to suppliers telling them find savings before asking for a price increase," he said.

"This is typical of the squeeze they apply to growers on price every day."

"And it’s disingenuous that supermarkets would cast doubt on the validity of these cost increase request for lack of being able to verify supplier costs when increases in the prices of fertiliser, chemical, labour and transport have been well documented and discussed over recent years."

Not all supermarkets have 'market power'

While the accusations against food retail giants Coles and Woolworths are well documented, what is not so clear is how the findings relate to the alliances of smaller independent food retailers.

The bulk of these chains of independent operators - including Supa IGA, Foodworks and Friendly Grocer outlets - are represented by the Metcash corporation.

One regional independent supermarket owner told the Coonamble Times that the power of Metcash still doesn't come close to that wielded by Coles and Woolworths.

"We don't have the same direct supply agreements as Coles and Woolworths," they said. "We usually buy direct from butchers or from the Sydney markets, we are price takers when it comes to meat and fresh produce.

"We don't have direct control over other suppliers either so therefore an independent retailer does not have as much control over pricing."

In 2023, a market overview reported that the Woolworths Group is the market leader with a massive 37% share of the market followed by Coles 28%, Aldi 10% and Metcash 7%.