New South Wales Farmers has hit back at supermarket giant Coles after a number of its suppliers received letters, asking them to "cut costs" rather than ask for price rises for their produce.
Farmers in the state have been facing pandemic disruptions, extreme floods, skyrocketing fertiliser and fuel prices and labour costs as well as logistical difficulties.
In the letter, seen by ABC, suppliers are asked to "turn their minds to" cutting costs on the supply side rather than relying on a price rise from Coles, which may not be accepted "in full or in part".
NSW Farmers vice-president Rebecca Riordan said farmers were doing it tough.
"My production costs on my farm have doubled — they're up over 100 per cent," she said.
"It's the most expensive wheat crop I've ever grown, so farmers don't have any margin at all at the moment to discount any further."
'Trying to screw the farmer'
The letter says the supermarket is receiving such a high volume of requests from suppliers to review their cost price that it has dedicated additional resources to deal with them.
The letter sent to suppliers by Coles makes it plain that not all requests for cost price increases will be considered or implemented, but if farmers do see savings they will be expected to pass those on to Coles.
Ms Riordan said statements like that revealed what Coles thought of farmers.
She said prices were not reflecting the fact that farmers' costs were through the roof and that the price increase that consumers were paying at the farm gate did not match production cost increases.
NSW Farmers was now calling for competition reform to address the supermarket duopoly.
"We've got a company like Coles, which is making a billion dollars a year after tax, flexing its muscle and trying to screw the farmer," Ms Riordan said.
"This is an example of a company exercising its monopoly power."
A Coles spokesperson said the company was committed to working with its suppliers to "navigate the challenges associated with inflation to ensure we are helping Australians with cost-of-living pressures while being fair and mindful of the impacts facing our suppliers".
"Over the past few months the number of requests we've received for price increases have risen significantly, and we have dedicated additional resources to ensure we're dealing with these requests in a fair and timely manner and in accordance with the Grocery Code, being mindful of both the impacts to our suppliers and our customers.
"When it comes to natural disasters, our fresh produce teams are absolutely committed to supporting our suppliers on the ground and we've worked closely with farmers and growers to help their businesses recover after devastating events such as the floods."
