Farmers deny they are running a "spin" campaign to divert consumers from blaming them for feeling the pain of soaring food prices.

"It's not spin," said Federated Farmers president Charlie Pedersen. "We have suspected for some time that the farmers' share (of retail food prices) has actually gone down.

"If that's the case, it's a strong signal to us that ... something needs to be done about it," said Mr Pedersen, who said that farmers historically used to receive up to half of the retail price of the foods they sold.

"Farmers' share for meat used to be some 40 percent to 50 percent," he told journalists in Wellington today. "It's slipped a considerable amount over the past 10 years".

He did not directly blame the nation's two main supermarket chains, but said: "There is considerable market power in the supermarkets.

"That is a difficult problem food producers around the world have not managed to meet in any meaningful way yet: the conversation we're starting ... is designed to stimulate the thinking of farmers and farmer groups as to how they need to engage with the real power in the food chain: the supermarkets."

Farmers' share of the retail price of milk had risen by 10 percentage points in recent years, to 35 percent, suggesting the meat industry could look at the benefits of the Fonterra-style approach, such as owning their product further down the processing chain, and cooperating more widely.

"Farmers are definitely not `creaming it' -- some of the things that make up the price of food are relatively invisible to the consumers in the supermarket," Mr Pedersen said.

These factors included the cost of processing, transport, the wholesalers' and retailers' profit margins, as well as the farmers' cut, which was mostly less than a third of the retail price.

The farm lobby released an economist's report to back its claim that farmers were receiving only a quarter -- on average -- of the retail prices charged for bread, milk, butter, cheese, honey, lamb and beef.

The report, prepared by the Institute of Economic Research (NZIER), showed the shares farmers receive from retail prices were:

• Milk 35.46 percent;

• Bread 16.37 percent;

• Lamb chops - 30.97 percent;

• Blade steak - 18.86 percent;

• Honey - 40.12 percent; and,

• Cheese - 5.3 percent.

Statistics New Zealand this week released figures for the year to April showing grocery food prices have risen more than 10 percent for the kinds of basic foods canvassed by today's report: butter is 86 percent higher, cheese 45.5 percent higher, milk 21.1 percent higher and bread is up 13.1 percent.

The surge in basic food prices -- at a time when Fonterra's 10,000 dairy farmers are expected to pocket an average payout of over $700,000 in addition to soaring capital gains on land and cattle -- has aroused concerns over how households will cope.

In liquid milk, the report said farmers were getting 10 percentage points greater share of the retail price in 2008 than in 2004: a rise from 25.35 percent to 35.46 percent.

Mr Pedersen said prices for commodities fluctuated and the good prices being paid by Fonterra this year will not necessarily occur next year .

His own business, based on the dairy farms he owns, and the others in which he has invested, had run at a "cash loss" over the past couple of years because even the current record milk payouts were not enough to cover his costs. Mr Pedersen downplayed the suggestion that many farmers were actually making huge amounts of money from the capital appreciation of their land, saying those capital gains were simply equivalent to city-dwellers seeing their house values rise.

Despite owning land worth a lot of money, some farmers' net incomes were significantly lower than those of city dwellers.

"There is a misconception that because dairy farmers are receiving good payouts from Fonterra, this is driving up prices," he said.

There was a link to export prices, "but this has never changed since New Zealand began exporting meat back in 1882".

About 95 percent of NZ dairy products were exported which meant that high international prices were reflected in domestic prices.

Over the past season, farmers had also had to cope with a severe drought and pay high prices for supplementary feed for their livestock.

"Many sheep and beef farmers will suffer losses this year," " Mr Pedersen said.