When I checked at my local shopping centre on Friday, the cheapest potatoes at Coles were $1.99 for a kilo of brushed potatoes. It was the same price next door at Harris Farm, the gourmet produce market. But at Aldi, in the same shopping centre, a two-kilo bag of brushed potatoes cost $1.99, exactly half the price per kilo at Coles or Harris Farm. The great question is: why does the price of the potatoes increase more than threefold between the farm gate and the shelves at Coles or Woolworths, a price double that charged by Aldi?

While we are at it, let's ask some of the bigger questions: why has Woolworths been able to maintain the momentum of 12 per cent profit growth for sustained periods, as its share price has grown fivefold over the past 10 years? Why has the share price in Wesfarmers, which took over Coles last year, grown from $10 to $34 over the past decade, during a period of sustained drought? Why has the combined market value of these two giants, which have the highest market concentration in the developed world, doubled to $60 billion during the past decade?

Why over the same period have one in four of those employed in the farming sector walked away from farming? At this point I will defer to someone who has made a career out of studying these issues, Associate Professor Frank Zumbo, of the Australian School of Business at the University of NSW.

"What is going on is an insult to the intelligence of Australian consumers," Zumbo says. "We've just had an inquiry into grocery and food prices. The report is a disgrace. It is a whitewash." A farmer, Vince Heffernan, used much the same language in a letter published in Saturday's Herald. "As a farmer I find the inquiry into food pricing insulting … The reality is that supermarkets have been making 18 to 20 times the profit per kilogram on meat that farmers make - not bad for 10 days to 14 days' work as opposed to the 17 months the farmers put in for their meagre earnings." The outrage of both men is directed at the 642-page report into grocery and food prices released last week by the chairman of the Australian Competition and Consumer Commission, Graeme Samuel. It was commissioned in the wake of Kevin Rudd's election promises last year to attack rising grocery prices.

"Based on this report, the Federal Government will do nothing to rein in the massive market power of Coles and Woolworths," Zumbo says. "It will do nothing to put downward pressure on grocery prices. Its proposals are cosmetic. GroceryWatch is another discredited FuelWatch. It should be called GroceryFarce. It is a waste of taxpayers' funds." Even the previous ACCC chairman, Professor Allan Fels, has been critical of the inquiry's report. But Woolworths and Coles are too shrewd to engage in the price gouging of consumers. They have kept retail prices in check so as not to provoke consumer anger, media outrage and political intervention. Rather, they have protected their dominance and fed their share price by actions below the radar of retail scrutiny.

Let me count some of the ways. Brand grinding: the big chains ask suppliers to "support their brand". If a company wants prime shelf space, or any space at all, they have to do deals. Hence products disappear to be replaced with foreign or inferior brands, not because of consumer buying habits, but because of deals the giants extract. Supplier grinding: the Woolworths and Coles house brands are taking growing shelf space because they can extract more money from the supply chain that way. They do so by grinding down the subcontractors who produce the products.

Choice reduction: the growth of generic brands is crowding out prime shelf space for other brands. Animal cruelty: the factory farms supplying the big chains engage in grotesque animal husbandry, especially of chickens and pigs. It takes three months for a free-range chicken to reach maturity, but a factory-farmed chicken lives for 40 days in dark, claustrophobic, additive-riddled conditions before being slaughtered for market.

Restrictive leases: the ACCC identified the problem of restrictive leases, where big retailers receive reduced rents if another supermarket is allowed to open in a shopping centre. Aldi, which represents a real threat to the duopoly, told the ACCC inquiry its growth had been restricted by "hundreds" of such leases. Land hoarding: the two giants hold banks of undeveloped sites, thus preventing potential rivals from developing them. Lobbying: the big two operate an aggressive political lobbying operation and are trying to have the Trade Practices Act watered down.

The cumulative impact of the status quo is some breathtaking disparities in fairness, disparities the ACCC report barely began to acknowledge.