“Supermarkets have claimed the drought is one of the predominant reasons for the rise in price of the basic necessities of life.

“Without a doubt, and fortunately, there has been a rise in price at the farm gate for products such as wheat. However, the increase in the cost of wheat in bread is in no way proportional to the actual increase in the price of the product, i.e., the loaf of bread.

“There is about 390g of wheat in the average loaf of bread. This wheat is worth $314 per tonne today. The price of wheat in your average loaf of bread is 12c. The price of the same quantity of wheat in 2005 was approximately 9c. Unfortunately, the rise in the price of bread in the same period has been 93c. The query people have is what are the other causes for this increase?

“No doubt there is inflation and everybody has the right to make money on a sale but to say the increase in supermarket prices is attributable to the drought is not necessarily so.

“The price of a litre of milk at the farm gate is around 34c but a litre of milk sells for about $1.50 at the supermarket. What a lot of farmers want to know is why they get the smallest portion of the price when they produce the vast majority of the product for a carton of milk?

“All these questions lead toward the excessive market power of the major supermarkets and the price they can command from the market, by reason of that market’s lack of breadth.

“If the major supermarkets and other organisations, such as oil companies, claim that they do no use predatory pricing or unconscionable conduct mechanisms to maintain their market share and inhibit competition, which brings a fairer price, then the strengthening of predatory pricing and unconscionable conduct laws shall be of no consequence to them.

“The problem with the current laws, post Boral, is that they are not definitive enough to stand the close examination of the ACCC or another party pursuing a case.” Senator Joyce said.