A Senate committee examining supermarket prices is holding a hearing at Orange in the NSW central west on Tuesday, with growers and agriculture groups to appear.

Orchard farmers from the region will speak to the committee, along with organisations including NSW Farmers, Cattle Australia and Dairy Connect.

The inquiry was set up following concerns supermarket giants Coles and Woolworths have been paying lower prices to producers for fruit, vegetables and meat while overcharging customers for the same goods.

In its submission ahead of the inquiry, NSW Farmers said imbalances existed in the food and grocery supply chain.

“Markets with many producers but few major retailers can lead to market failure in the form of market power,” the submission read.

“The harm that arises from this can take many forms including producers receiving prices below their marginal cost of production.”

The peak body has called for divestiture powers to be introduced, along with options to be developed to increase competition.

Orange-based cherry and apply farmer Guy Gaeta will also give evidence before the Senate inquiry.

He said many had turned their backs on working in the industry due to the treatment of farmers by the major supermarkets.

“People don’t understand how ruthless the supermarkets are,” he said.

“Just to sell a zucchini it has to be perfectly straight – pretty soon they will expect bananas to be straight, believe me.”

The inquiry comes as the Australian Competition and Consumer Commission conducts its own year-long probe into whether customers were paying too much at the supermarket checkout.

A review of the grocery code of conduct is also under way, with former Labor minister Craig Emerson leading the work.