Farmers trapped in a David and Goliath relationship with Australia's supermarket giants are likely too afraid to raise issues for fear their products will disappear from the shelves.
Craig Emerson, a former Labor minister and economist, made the comments in a consultation paper as part of the review of the Food and Grocery Industry Code of Conduct released by Treasury.
The federal government commissioned Dr Emerson to undertake the review following accusations of major supermarkets' price gouging shoppers living through a worsening cost-of-living crisis.
He has been asked to consider whether the Code between suppliers, retailers and wholesalers should be made mandatory, strengthened or completely rebuilt, along with issues related to bargaining power imbalances and complaint management processes.
"Critics of the voluntary code argue that suppliers are too frightened to raise a dispute with a supermarket for fear of their product being removed from the supermarket's shelves," he said.
Farm leaders have been vocal for several years on declining farmgate prices not being reflected in a dip in checkout prices.
Dr Emerson also said a new mandatory code of conduct with beefed-up financial and legal penalties could encourage greater compliance by supermarkets and create a faster dispute resolution process than what is currently in place.
"A mandatory code with penalty provisions would likely incentivise greater compliance by supermarkets," he said.
"Enforcement options could include infringement notices and court proceedings to impose financial penalties for non-compliance."
The paper said that penalties for breaches of other industry codes of up to $187,800 per offence would be inadequate against supermarket giants.
"Given the size of major supermarkets, it is likely that the threat of substantially higher financial penalties would be needed to act as an effective deterrent to breaches of the code," it said.
The paper also discussed previous Australian Competition and Consumer Commission reports recommending that the current voluntary or optional code be replaced with a mandatory code.
The federal government also recently announced that the ACCC had been asked to undertake a price inquiry into the supermarket industry.
"It is through greater competition between supermarkets that the policy goals of higher prices for suppliers and lower prices for consumers can be achieved," Dr Emerson, who will also investigate how supermarkets are policed overseas, said.
The consultation paper said while the US's top four supermarket chains accounted for just 34 per cent of market share in that nation, Woolworths, Aldi, IGA and Coles currently held a whopping 80 per cent of the Australian market.
Submissions close on February 29.
Meanwhile, National Farmers Federation horticulture council chair Jolyon Burnett said public health was being negatively impacted by the higher prices placed on fresh food.
Mr Burnett made the comments following the release of new Australian Bureau of Statistics data that only 56 per cent of respondents were purchasing fruit and vegetables due to price spikes.
He warned the situation could also have downstream consequences on the health system.
"Without an intervention, the burden of lifestyle disease on our health system is only going to grow," he said.
"Latest numbers from the ABS show just over 6 per cent are consuming enough vegetables and almost twice the proportion of adults reported that they do not usually eat fruit daily in 2022 when compared to over a decade ago."
He called on the federal government to invest in a public health campaign targeting the decrease in consumption of fruit, vegetables and nuts.
