Government threatens to pull 'all levers' to ensure supermarkets pass on cost savings, as Craig Emerson picks up grocery code review

The federal government has announced it quietly appointed a former Labor minister to lead its review into how supermarkets conduct their business, as it threatens to use all options available to it to bring down grocery prices. 

The government has been under pressure to do more to relieve cost-of-living pressures, and has in recent weeks pointed to an existing review of the Food and Grocery Code of Conduct as one of the steps it is taking to address inflation.

Yesterday Nationals leader David Littleproud criticised the government for spruiking the review when it had failed to appoint a reviewer 100 days on from announcing the probe.

But speaking to the ABC, Prime Minister Anthony Albanese said former trade and competition minister Craig Emerson had been quietly appointed before the Christmas break to build on work already done by Treasury.

He said the appointment was simply not announced.

A review of the grocery code was required before it automatically sunsets in April next year.

Supermarket chains, in particular the two major chains Coles and Woolworths, have been under scrutiny for recording large profits while raising prices substantially, leading to claims of price gouging.

Mr Albanese said the government was prepared to use all options available to ensure businesses were passing on lower costs to their customers.

"We have been clear — if the price for meat and fruit and vegetables is going down at the farm gate then families should be seeing cheaper prices on supermarket shelves too," Mr Albanese said in a statement.

"Supermarkets have a duty to make sure they're providing affordable options for all Australians, especially when they're making savings on their own costs.

Agriculture Minister Murray Watt said farmers were not receiving good prices and the huge mark-ups by supermarkets did not "pass the pub test".

"We should be seeing dramatic falls at the supermarkets as well, it is just not fair for consumers to be paying high prices for goods at supermarkets when farmers aren't receiving good prices at the farm gate," Mr Watt told the ABC.

Code to examine supermarket dealings with suppliers

The grocery code review will assess its effectiveness at improving relationships between supermarkets, distributors and suppliers, including farmers, and whether it should be made mandatory.

Currently, the voluntary code has only been signed onto by ALDI, Coles, Woolworths and wholesaler Metcash, as well as suppliers to those signatories.

Those businesses agree to bargaining in good faith, including negotiating without duress, paying suppliers on time and limiting the ability to charge for shelf space, promotions or theft recovery.

National Farmers' Federation president David Jochinke said the code should be made mandatory, but that it wasn't just supermarket dealings that concerned him.

"It's not just supermarkets we need answers from, we need to know who else in the supply chain is clipping the ticket and sending food prices skywards," Mr Jochinke said.

"As the cost of farming and the cost of living go through the roof, now is the time to correct this power imbalance and improve market price transparency so it's not being used against farmers."

However, while the review will examine relationships between supermarkets and their suppliers, it won't look at their dealings with customers.

A separate Senate inquiry is set to examine supermarket pricing this year, including whether an effective duopoly between Coles and Woolworths has led to opportunistic pricing, price mark-ups and "discounts that are not discounts".

The grocery code review is due by the end of the financial year.