Major industry bodies have accused the supermarket duopoly of manipulating the market for its own benefit in submissions into the sector’s pricing practices.

In its submission to the Australian Competition and Consumer Commission’s (ACCC) supermarkets inquiry, the National Farmers Federation (NFF) said that it is reported by suppliers that they “rarely if ever achieve the volumes sold into supermarkets that were originally signalled through the non-binding “forecast” figures”.

“Potentially, these figures may be deliberately overstated to trigger oversupply scenarios, which can both guarantee supply to the supermarkets while also providing downward pressure on the prices paid,” the submission read.

“This potential practice of deliberate market manipulation, if substantiated, is perhaps one of the most serious interferences by supermarkets in the efficient and fair functioning of fresh produce markets.”

The NFF asked for reduced incentives for supermarkets to encourage oversupply by forcing them to provide summaries on the difference between forecasts and actual purchases, the introduction of penalties for being deliberately misleading, and regular monitoring.

The NFF’s statement was supported by the Queensland Fruit & Vegetable Growers, which said that “growers are negotiating in a supply and demand market without any data on supply and demand”.

“In fact, the optimal result for a retailer is to have an oversupply situation,” it said.

“We are now questioning how retailers may be manipulating free market conditions by using supplier agreements as one tactic to purposely ensure oversupply.”

Supermarket response

Australia’s two largest supermarkets, Coles and Woolworths, have a market share of about 65 per cent, but have come under intense scrutiny over pricing practices and their treatment of suppliers.

The Albanese government asked the ACCC to launch its inquiry into supermarkets in January, before an interim report by the end of August and a final report be released no later than February.

Woolworths, in its submission, said that it negotiates “specific volumes and pricing with our supply partners each week due to the highly variable nature of supply volumes”.

“The prices of fruit and vegetables in Australia are primarily driven by supply and demand,” Woolworths said.

“Supply is heavily influenced by short and long-term growing conditions and extreme weather events.”

Coles and Woolworths defended the way they dictate supply with their suppliers. Photo: Getty

In its submission, Coles said that a “significant focus on allegations of misconduct by supermarkets towards suppliers” had masked the dedication and progress that Coles has shown towards improving its supplier relationships.

“Coles understands that some growers are concerned about a lack of pricing transparency, including indicators prior to harvest about the prices they may receive for a crop,” Coles said.

“Coles believes that greater transparency in pricing could potentially be achieved by … market data becoming easier for growers to access.”

Other fronts

Coles and Woolworths have also been in the sights of bodies including the ACCC, the Australian Council of Trade Unions (ACTU) and a Senate inquiry in recent months.

Choice, a consumer group, recently completed research funded by a $1.1 million grant from the government into supermarket pricing, which found that Aldi was on average 25 per cent cheaper than Coles and Woolworths.

The ACTU’s price gouging inquiry found that Coles and Woolworths  “have been using their market dominance and a host of dodgy practices to push up prices during a cost-of-living crisis”.