The case which suppliers to supermarkets are making is that they have too much buying power. The share of the market which the big supermarkets are controlling is growing - an example of this is "Tesco Metro" which has bought out smaller players (i.e. moving away from just large stores to almost cornershop-size stores). In addition the number of large players on the market is decreasing (e.g. the reverse-purchase of Safeways by Morrisons).

The result of market consolidation is that individual supermarkets have enormous bargaining power. Your theory of how pricing should work is reasonable as a general principle but there can be dangers in imperfect markets. In this case, the shift of power to a handful of supermarket chains means that suppliers can be effectively shut down at a whim. This threat alone may mean that suppliers will sell at a loss instead of losing all their sales over night. Even if we ignore any long-term concerns from this practice, there is still a valid question of whether the produce is receiving a "fair" price. Of course fairness is subjective but I understand the concern where the price has been pushed significantly lower purely as a result of aggressive bargaining.

With all the cries that 'something must be done' I wonder what must be done.
If we introduce a regulatory authority it will, like all regulators, become beholden to the interests of the supermarkets, probably with the effect of stifling competition.

We must share part of the blame, with the Common Agricultural Policy encouraging farmers to grow produce for which they will obtain above market prices thus keeping the supply too high.

Much of the argument comes from the belief that we must be able to be self sufficient in terms of food incase there's another major world war. The fact that we aren't and wouldn't be seems beside the point. This argument however is used by other industries, and has been shown dismissed, why farming should be different I don't know.
I would prefer for the world to become a dependent net of trade. Trade promotes peace and prosperity.

I agree that the regulations are too complex and costly for small business, this should be a priority for any liberal party to rectify.

As to other options, they are there, sometimes they're cheaper (my mother buys her fruit and veg from Walthamstow Market because its cheaper), these vendors are often penalised by regulation and government (Waltham Forest council has started messing with the market to 'improve' it, the quality of the market has reduced...)
Those with money to buy more expensive food are at liberty to do so, but they have no right to dictate that others should pay higher prices.

I have considerable sympathy for farmers in this situation; things have changed and their previous pricing structure is no longer appropriate. But what are the alternatives?

We can either pass a law stating that supermarkets must pay a 'fair' (as defined by the farmers) price for their goods, a cost which will be passed on to the consumer and will, I expect, disproportionately affect the poorest, or we can subsidise farmers directly out of taxation. So we might as well give up on that whole 'Make Poverty History' idea then.

The other option would be to enforce some kind of breakup of the major supermarket chains and enforce a maximum market share (or some other equivalent measure) which would give the farmers more buyers. However, my initial response to that is that it would create greater overhead costs, thus hurt the consumer, and if it had any effect on competition at all it would be to increase it, so those broken-up chains would be looking for even lower prices from farmers. And if we take a moral position that near-monopsony (or oligopsony, if you prefer) is bad, then presume we'd have to apply that principle in other areas. Like schools and the NHS perhaps? After all, don't nurses and teachers deserve the same as farmers? Yet, somehow I don't think that's what the anti-supermarket people are arguing for.

Kylie

Touche! :-)

With respect to your comment about my telling the farmers face to face, I wouldn't like to do it, of course, but this is not really relevant. At the end of the day there is too much supply and not enough demand. Until there is consolidation in the farming sector, it will remain a buyer's market. And yes, that means real pain for real people - I understand that. I live in a rural community - people I know would be affected. But why should the textile mill down the road and the people there subsidise the farmers who are much wealthier than than they are?