Farmers from four states in Australia have established a committee to propel a mandatory code of conduct to prohibit price gouging since the price war between local supermarket giants has made them overwhelmed, local media ABC News reported on Tuesday.

Agricultural lobby groups from New South Wales (NSW), Victoria, Western Australia (WA) and Queensland have all involved in the committee.

According to the committee's farmer representative, Peter Darley who is also the chair of the horticulture committee in the NSW Farmers'Association, the monopoly of local supermarket giants Coles and Woolworths leads to huge loss for many producers.

The Australian Food and Grocery Council suggested that the continuous discount campaign had pushed up producers' costs by more than 6 percent.

Earlier this year, a milk price war between Coles and Woolworths caused dairy farmers to claim they are producing milk below cost.

"Coles and Woolworths always claim that there's a super market war, it's a retail war," Chief Executive Officer of dairy company Dairy Connect Michael Logan was quoted as saying.

Peter Darley said that the farmers who are hoping to get a fair price for balancing the cost of production have been ignored by the supermarkets and put at risk in the price war.

"You know, the dollar a liter for milk, that's had a huge impact on the dairy industry. It's under the cost of production and you just can't maintain those sorts of prices," said Darley.

He also said that the code of conduct should apply to everyone involved in the supply chain.

However, Margy Osmond, chief executive officer of Australian National Retailers' Association, said that farmers and suppliers are being unfairly treated.

She said the farmers'innovation and capacity to operate is the key to remain good relationship with the supermarkets rather than price, since enormous number of farmers have kept long-term relationships with the supermarkets.

The Australian Competition and Consumer Commission (ACCC), the national consumer watchdog, is investigating allegations of improper behavior by supermarkets and is yet to decide whether action will be taken, local media said.