EXCLUSIVE: SUPERMARKETS are thumbing their noses at consumers by selling phony imported olive oil in their house-brand lines.

And Australian producers are taking the hit as they are out-competed on the supermarket shelves by dirt-cheap imports, which are not what their labels suggest.

Accredited laboratory testing conducted exclusively for The Weekly Times has revealed samples of Coles and Woolworths house brands of premium or "extra-virgin" olive oil failed to meet the Australian standard for extra virgin.

The Weekly Times investigation has revealed:

THREE brands - Coles' brand Spanish import, Italian giant Lupi and Australia's biggest-selling brand made by Spanish company Moro - selling inferior oil falsely labelled as "extra virgin".

SAMPLES of all three of those brands were found to be "rancid" by the testing laboratory.

Woolworths' home brand, also imported from Spain, failed a chemical test and also did not display a batch number or best-before date as required by the Australian standard.

That standard for olive oil, signed off on in July, is voluntary and has not been enforced by either major supermarket.

But it has been adopted by bargain king Aldi - it bans the terms "extra light" and "pure", which are considered misleading.

Last week both major chains refused to guarantee The Weekly Times they would not knowingly sell oil that did not live up to its label.

Australian Olive Association president Paul Miller said supermarkets should "want to supply people with what is on the label".

"This is not about them and us (importers and local producers), we just want the product on the shelf to be the real thing," he said.

He said the extra-virgin category was hurt by consumers buying sub-standard oil, which was not extra-virgin.

Penalties imposed by the ACCC two years ago - which required importers caught using incorrect labels to test the oil for two years - had proven to be an ineffective deterrent, he said.

Moro and Lupi have been previously found to fall short of their labels.

Accredited tests in 2010, 2009 and 2008 all found serious problems with imported olive oil.

The Weekly Times understands its tests, conducted by Modern Olives Laboratory Services, mirror results recently given to the Australian Competition and Consumer Commission.

It also understands Australian Customs is letting thousands of litres of oil into the country via India - India does not produce olive oil.

Home Affairs Minister Brendan O'Connor and Australian Customs had both failed to supply comment at the time of going to print.

The Weekly Times asked both major supermarkets whether their own brands should be removed from the shelves until it could be proved they lived up to their labels.

A Coles spokesman said the supermarket would review the test results with its supplier "and decide if any further action needs to be taken regarding this product line".

A Woolworths spokeswoman said its home brand met "regulated food standards requirements".

A spokeswoman for Conga Foods, which owns Moro in Australia, said the company was "surprised" at the panel finding its oil "rancid".

A spokesman for Lupi declined to comment.

A spokeswoman for Agriculture Minister Joe Ludwig would not answer our questions, but instead encouraged The Weekly Times to provide test results to the ACCC.