An influential lobby group has supported looking into setting up a supermarket code of conduct to ensure food suppliers are treated fairly, after a survey found mark-ups of up to 500 per cent on fresh produce.

The Food and Grocery Council, which represents mainly food manufacturers, yesterday spoke out in favour of investigating the concept - promoted by the Green Party in the wake of its survey - but only if the supermarket code set up in Britain in February proves successful.

"It's a model which is worth consideration," said council chief executive Katherine Rich, a former National MP. Green Party food spokeswoman Sue Kedgley said the survey found that supermarkets applied mark-ups of up to 500 per cent, although 100-200 per cent was the range mostly reported by growers.

The "opt-in" survey was completed by 75 growers who contacted the party after hearing about it.

Two-thirds mainly supplied produce to wholesalers and 15 per cent mainly to supermarkets - the rest supplying mainly both or other outlets.

"Our survey suggests that unfair pricing practices on the part of some supermarkets are decimating many fruit and vegetable growers and putting their industry at risk," Ms Kedgley said.

Over-priced produce meant many people couldn't afford to buy enough. "The Government must address the huge power imbalance between two giant supermarket chains and the small-to-medium size growers that are the backbone of our horticultural industry.

"There is a supermarket code of conduct and ombudsman in the UK to ensure growers and consumers are treated fairly, and it is clear we urgently need one here." Mrs Rich said relationships between supermarkets' top executives and their food suppliers were generally good, "but further down the hierarchy there will be sometimes isolated incidents of bad behaviour".

"For example, individual store owners might de-list certain products, ban promotions and take steps which in a fair business environment are unacceptable."

Consumer Affairs Minister and Act MP Heather Roy said the survey was unscientific and the sample too small to reach statistical significance.

She said consumers had a wide range of choice to buy produce other than at supermarkets.

"The Government isn't about to start dictating to retailers what their profit margins should be."

Horticulture New Zealand chief executive Peter Silcock said: "There is real concern about the power of buyers generally and what impact that is having on grower returns."

Tony Carter, managing director of Foodstuffs group, which includes Pak 'n Save, said it was not correct that supermarkets in the group marked up produce by 100 to 500 per cent. He would not reveal the margins, which were commercially sensitive.

A spokeswoman for the Progressive Enterprises supermarket chain, which includes Foodtown, said last night that she could not comment on the survey as she had not seen it.

* Fruit and vegetable growers said supermarkets sold produce mostly for 100 per cent-200 per cent more than what they paid for them.
* 18 per cent of growers said prices "often" only just met, or fell short, of production costs.
* 23 per cent said they only "occasionally" made a profit.
- Source: Green Party survey