Potato grower Matt Ryan says the supermarket giants and consumers are more responsible for low prices than processor Simplot.
Potato growers unanimously rejected Simplot's price offer last week and are working to negotiate a new contract. But Mr Ryan said Simplot was the processor stuck in the middle of growers, consumers and retailers.
"There needs to be a line drawn in the sand with the retailers educating consumers that food doesn't have a value other than a low price," Mr Ryan said.
"It's time that the consumers were made aware that there can't be sustainably a constant downward spiral in food prices in Australia. It just cannot continue. There needs to be recognition from the supermarkets of the true value of food production in this country."
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He said supermarkets were all about "taking the Australian supply but wanting it at the Chinese price".
There are about 140 potato growers in Tasmania who sell to Simplot, and its Australian division made $62.3 million for its parent company's American shareholders last year.
"We have a certain set of standards and conditions that we expect in this country, and we need to be rewarded, so there are some sustainability and value at the bottom end of the supply chain," he said.
"Otherwise it's just not going to work, and it will collapse.
"We've seen it in the dairy industry, and the supermarkets, in particular, have got a lot to answer for.
"We certainly need to be fairly rewarded at the bottom end of the supply chain. Otherwise, you've basically got small businesses and farmers becoming second rate business people.
"Unfortunately we are in an environment where the bottom end of the supply chain, whether you're a dairy farmer or a chicken producer or a potato grower, you're constantly being squeezed through the supply chain and being expected to subside low price points."
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