Coles gets 70 requests a week for a pay rise from farmers

That was almost double the level of requests for more money from the 2021 financial year and farmers cited increased costs of production and increases in global commodity prices as the big reasons for asking for more.

The revelation from the supermarket, which sources 96 per cent of its fresh produce by volume from Australian suppliers, came in Coles' submission to the Senate Select Committee on Supermarket Prices, set up to report on the price setting practices and the market power of major supermarkets.

Coles also said despite shelf prices being higher, it's profits have not increased.

The Coles submission also broke down operating revenue to show that less than 3pc is net profit after tax (NPAT), an indication of the high volume nature of supermarket business.

For every $100 of operating revenue that Coles earned in financial year:

The submission said despite the impact of inflationary global and local events, including a pandemic, the conflict in Ukraine, natural disasters and other supply chain disruptions, Coles' NPAT had remained stable over the past five years.

"That is, while supermarket prices may have increased in our stores, this did not translate to greater NPAT in FY23," the submission said.

Coles, which started as a single store in 1914 in Collingwood, Victoria, today processes around 17 million customer transactions nationally each week across a network of more than 1,800 stores.

The business employs in excess of 120,000 people, paying out $5.1 billion on salaries, wages and benefits in the 2023 financial year.

The discrepancy between supermarket shelf prices and those paid to producers has been a key factor driving government attention on supermarkets, which includes not only this inquiry but a review of the Food and Grocery Industry Code of Conduct and a price inquiry by the Australian Competition and Consumer Commission.

In the red meat category, Coles said it relied on forward contracts with suppliers for the majority of its supply, with less than 2pc of Coles beef bought from saleyards.

Coles said it had specific requirements for size and consumer preferences, such as hormone-free beef, and sourced cattle in most instances from suppliers and processors it had been dealing with for decades.

In horticulture, Coles enters seasonal commitments, which are volume based, with agreed quality and volume specifications, ethical requirements, and distribution centre locations as part of these commitments. The length of these commitments varies based on seasonality and regionality.

With milk, in 2019 Coles started sourcing Coles Own Brand fresh white milk directly from farmers on long-term contracts.

Coles procures directly from over 2,500 producers across Australia, the submission said.

The Coles submission also outlined investments the supermarket has made aimed at lowering grocery prices.

These include growing its Coles Own Brands and investing in automation to deliver operational efficiencies.