The Australian Competition and Consumer Commission (ACCC) has found grocery retailing is “workably competitive” and rejected evidence from farmers that there was something fundamentally wrong with the grocery supply chain.

However, the commission, which conducted a six-month inquiry into the grocery sector, said grocery retailing was restricted by factors such as limited incentives for price competition between the major players, Coles and Woolworths.

The report recommended relaxing zoning and planning regulations to make it easier for new retailers to set up; compulsory unit pricing requirements for retailers and tougher laws against “creeping” acquisitions by big retailers.

The commission also called for the horticulture code of conduct to be toughened up, including extending it to cover all “first point of sale” transactions by growers and rule that retailers must provide pricing formulas before delivery.

However, the National Farmers’ Federation vice president Charles Burke said “farmers remain bemused as to why there is such a huge gap between what farmers are paid at the farm-gate and what consumers are charged at the checkout”.

Mr Burke said the inquiry was focused too heavily on the retail sector and ignored the actions of many within the supply chain.

However, chairman of the NSW Farmers Association horticulture committee, Peter Darley said the measures to improve the horticulture code should provide some clarity and transparency in the supply chain.

“I think it’s heartening to see retailers, processors and exporters be part of the horticulture code,” Mr Darley said.

“If they're going to deal with growers there will have to be commitment to prices negotiated with growers and if there's any rejection of a product, it can only be made 24 hours afterwards.”

The federal government has so far

committed itself to implementing a

creeping acquisition law, but not before

it releases a discussion paper by the end

of August.