THE nation's competition watchdog has been warned the market imbalance created by the "big dragon" supermarket duopoly will continue to push food prices up and drive family-owned operations out of business.
Food Industry Alliance met with the Australian Competition and Consumer Commission (ACCC) about addressing unfair contract terms and trading practices across the entire supply chain.
Independent Food Distributors Australia chief executive Richard Forbes said the newly-formed alliance represented or supplied food to more than 156,000 businesses with a combined revenue of $220 billion and employing almost 1 million people.
"We need to protect family-owned businesses against the misuse of market power, that's really important," Mr Forbes said.
"We don't want to end up with a corporatised supply chain in this country."
Master Grocers Australia chief executive Jos de Bruin said Woolworths and Coles controlled 75 per cent of the market share, and with Aldi controlling 10pc, independent businesses were left sharing 15pc of the market.
"[The duopoly] is like a big dragon that hauls around and when its tail swishes, it knocks things off their perch - and they are so big, they don't even know what they're doing half the time," Mr de Bruin said.
"But the one thing that is for sure, is that we're incurring the wrath of an imbalance of market power."
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That power imbalance materialised in lopsided contracts for farmers, who had "their hands tied behind their backs", and increased prices for smaller businesses, who were forced to "pick up the scraps and try to find sources of supply elsewhere".
"Large corporates can push down cost prices, which in the case of many suppliers is unsustainable and so therefore they use those contracts for overhead recovery," Mr de Bruin said.
"Then they just have a normal regular list price for the independent sector. There's a higher margin that they can capture because you're dealing with a whole bunch of different people rather than a conglomerate."
National Farmers Federation chief economist Ash Salardini said farmers were on the frontline of unfair competition laws.
"The price is the price, the conditions are the conditions, and you're not going to get a fair or good outcome from those negotiations because you have no alternative," Mr Salardini said.
The price of food has skyrocketed due to the pandemic, the war in Ukraine and a shipping crisis with an estimated one-fifth of all cargo ships stuck in the world's busiest port Shanghai due to a COVID-19 lockdown.
But even before the international events, Australians were paying some of the highest prices for groceries in the world.
"That's despite the fact Australia can produce food so cost effectively that we can compete anywhere in the world," Mr Salardini said.
"When there's a lack of competition, there's no incentive for a supermarket to give the best deal to the consumer."
Mr Forbes said the meeting with the ACCC was positive and the competition watchdog was prepared to get its hands dirty.
"We certainly got a good hearing from ACCC chair [Gina Cass-Gottlieb], she is very focused on ensuring these various aspects of competition policy are strengthened," Mr Forbes said.