Australian Senate to probe supermarket price spikes and supplier protection

Farmers have welcomed a Senate inquiry that will investigate Coles and Woolworths’ price-setting patterns.

Farm leaders have welcomed a Senate inquiry into claims of profiteering by Australia’s supermarket duopoly and the impact of market concentration on small to medium farmers supplying to the retail giants.

The Greens secured the cross-party support it needed to launch an investigation into Coles and Woolworths amid growing community and policymaker concerns of retail price spikes during a cost-of-living crisis where interest rates have risen 13 times since May 2022.

The inquiry terms of reference provide powers to probe the effect of market concentration on food prices, price-setting patterns including “opportunistic” mark-ups, and rising supermarket profits.

It will also review frameworks designed to protect suppliers when interacting with the major supermarkets.

National Farmers’ Federation president David Jochinke. Picture: Supplied

National Farmers’ Federation president David Jochinke said an “imbalance in market power” and low competition was hurting producers and forcing many farmers to be price takers.

“We know what Australians are paying at the checkout, and we know what we’re receiving as farmers – but who clips the ticket in the middle is shrouded in secrecy. We’d like to see a lot more transparency,” he said.

However, Mr Jochinke warned the government not to allow the inquiry to delay other supply-chain reforms, saying it could pull levers to “level the playing field” for farmers.

These included mandatory price reporting, improved disclosure, price reporting platforms and increased consumer watchdog funding to actively monitor markets and supply-chain relationships.

The Senate inquiry will not start until next year.

Greens economic justice spokesman Nick McKim said the inquiry was a critical step toward “dismantling” market concentration “that’s led to unfair pricing and stifled competition”.

“Coles and Woolworths are making billions in profits because they feel that they can overcharge people without repercussions. It needs to end,” he said.

Greens Senator Nick McKim in Parliament House in Canberra. Picture: NCA NewsWire / Gary Ramage

Nationals’ leader David Littleproud said an Australian Competition and Consumer Commission inquiry could force more immediate action.

Treasury recently delivered a final report of the review of the Food and Grocery Code of Conduct to government.

Woolworths and Coles control about two-thirds of the Australian supermarket trade.

In August, Woolworths reported the company’s net profit increased 4.6 per cent in 2022-23 to $1.62 billion, including a 20 per cent increase in earnings from its Australian supermarket business.

Coles recorded a net profit of $1.1bn, a 4.8 per cent rise year-on-year.

The ATO last month released its 2020-21 corporate tax transparency report that showed Woolworths paid $460 million in tax from $58 billion revenue in that period, while Coles paid $382 million on $44 billion revenue.

Meanwhile, Agriculture Minister Murray Watt has called on supermarkets to freeze the price of leg ham prior to Christmas after recently calling for the gap to be closed between shelf prices and farmgate rates received by livestock producers.