An undercover investigation has exposed the exploitation of illegal migrant workers on farms supplying Coles and Woolworths, as a Federal Government adviser called for reforms to stop the "systemic" abuse of foreign labour.

Key points: Undercover investigation finds illegal foreign workers being exploited on farms

Undercover investigation finds illegal foreign workers being exploited on farms Some labour hire contractors are disregarding visa rules

Some labour hire contractors are disregarding visa rules Federal Government adviser says problem is "systemic"

A joint 7.30 and Fairfax Media investigation infiltrated the underworld of illegal workers and labour hire syndicates operating in northern Victoria and southern NSW.

Dozens of illegal labourers on the farms said they were being underpaid by about $9 an hour to pick and package fresh produce that ends up being sold by Australia's big supermarkets.

Swan Hill stone fruit grower Cutri Fruit was one of several operators using underpaid illegal workers supplied by labour hire contractors.

'They dodgy it up'

On a secretly recorded video, a Cutri Fruit senior manager told an undercover journalist from Malaysia the labour hire contractors flouted visa rules.

"Are you legal? You got legal papers?" the farm manager is heard asking the undercover journalist, who worked for several days as an illegal labourer.

"I can't employ you direct. You don't have the paper. You know what I mean? That's why we use the contractor because, I don't know, they dodgy it up."

The journalist, Saiful Hasam from Malaysian language daily newspaper Utusan Malaysia, was followed by 7.30 and Fairfax Media to gather evidence about unlawful employment syndicates that are promoted through advertisements in Malaysia.

There are thousands of foreign workers employed on Australian farms with either short-term tourist visas or student visas. Those on short-term visas are not allowed to work, while those with student visas can work up to 20 hours per week.

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Mr Hasam entered Australia on a short-term visa which did not permit him to work, but he had no problem finding a job after landing in Australia late last month.

After a telephone conversation with one of the labour hire contractors supplying workers to Cutri Fruit, Mr Hasam was offered a job and accommodation near Swan Hill.

The run-down house the journalist stayed in was owned by Cutri Fruit and run by the labour hire contractor as a temporary home to about 12 other illegal foreign workers.

After working 23 hours over several days, Mr Hasam was paid $110, which was reduced to $40 after $70 rent was taken out.

'Significant numbers are really exploited'

Migrant Worker Taskforce chief Allan Fels said there is a "systemic" abuse of foreign labour. ( ABC News )

The Turnbull Government's Migrant Worker Taskforce chief, Allan Fels, said major reforms were needed to confront the growing problem.

"There is enough evidence to say that it is systemic," Mr Fels said.

"Significant numbers are really exploited."

Opposition Leader Bill Shorten called on the Government to deploy more resources to act "on these widespread and disturbing examples of exploitation".

"These people are being exploited and abused. They're pushing down wages for legally employed workers. Companies that do the right thing are being undercut," Mr Shorten said.

Tim Kennedy, federal secretary of The National Union of Workers, which represents horticultural workers, said there were countless stories of exploitation of foreign workers on Australian farms.

"Some farmers want labour that they can exploit the hell out of. Migrants are not seen as people, but commodities," he said.

Mr Kennedy accused the big supermarkets of ignoring the scale of worker exploitation in their supply chains.

Cutri does not 'knowingly exploit illegal workers'

In a statement, Cutri Fruit said the company "would never knowingly exploit illegal workers from foreign countries".

"Our part-time and seasonal temporary workforce are engaged through contractors, as has been industry practice for decades," it said.

"Our contractors are subject to an agreement which specifically states that they are required to check the validity of any foreign workers' visas and to meet set pay rates.

"Should any of our current contractors be found to be in breach of employment laws or visa requirements their agreement will be terminated. Two contractors were terminated prior to this harvest (one in March and one in October) because of concerns about their employment practices.

"Cutri Fruit will also implement a broader independent audit this month to assess if there are any undetected issues."

A Coles spokeswoman said the supermarket had referred the allegations about Cutri Fruit to the Fair Work Ombudsman and had launched its own investigation.

Woolworths said it required its suppliers to abide by employment and migration laws and would refer any allegations about a supplier breaching the law to relevant authorities.

Costco said it will stop buying Cutri Fruit until an audit of the company's practices is done.