While Australian and Indonesian heads of state are talking about signing codes of ethics to resolve the diplomatic row over spying, supermarkets in Australia are mulling a code of conduct in relation to their suppliers.

Behind the proposed grocery code of conduct with suppliers are Woolworths Chief Executive Grant O'Brien and Wesfarmers Managing Director Richard Goyder. The two urged competitors Aldi, Costco and IGA to ink the code of conduct.

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Mr Goyder said by agreeing to a code of conduct, all stakeholders would place a premium on what is best for their customers.

The code was finalised last week by Woolworths and Coles after 14 months of negotiations with the Australian Food and Grocery Council. It aims to establish a clear set of principles to trading relationships between retailers and suppliers and aims to provide more certainty and clarity, minus additional cost or making things more complex.

Mr O'brien said, quoted by the Sydney Morning Herald, "In my view, the code will work because it is industry-owned. It will not add red tape or stifle competition. In this context, its voluntary nature should be seen as its strength. Self-regulation will always be preferable to government intervention."

But the three are not interested in signing the code. Metcash believes the document is irrelevant since it is engaged in wholesale and not retail, while Aldi and Costco said they enjoy good relationship with their suppliers.

Meanwhile, Woolworths Chairman Ralph Waters defended the sale of its Dick Smith consumer electronic business and the losses that Woolworths sustained on its Masters home improvement business.

Masters lost $139 million in 2013 and is expected to log similar loss for the next year before it breaks even in 2016. He said Woolworths would rather build Masters from scratch instead of spending millions buying an existing business.

He urged investors to have patience and confidence in the company's past record and promised a decent-sized business in five years.

As for Dick Smith, Mr Waters said that the electronic store was a non-core business for Woolworths and is better off in the hands of private equity firms Anchorage Capital Partners which purchased the business for $94 million.

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