To begin with, the price is negotiated well in advance. I mean months in advance. To know the going price of a product at the right time, taking into account when the store flyer will come out, you need a crystal ball.
The grocery store negotiates with two or three suppliers at the same time for the same product. Whatever the price is magically determined to be, the lowest bidder gets the order. In order to get part of the order, the highest bidder has to match the lowest bidder's price. Otherwise, the whole order goes to the lowest bidder. Nevertheless, production is based on an initial agreement approved by both parties, the grower and the supermarket chain.
If the grocery chain asks the growers to produce 10,000 cases of lettuce a week, say, but ends up taking only 2,000, what do we do with the other 8,000 cases? It's better to sell them at a discount than to leave the crop in the field and throw it out.
I wouldn't call it a two-way negotiation. The most powerful side or the lowest bidder comes out on top. That's really how it goes.