Fruit and veg is set to become the new battleground of the supermarket price war in Australia after Coles announced it will reduce the cost of selected products by up to 50 percent from Tuesday.

If Woolworths follows suit, fresh produce will become the latest product to be heavily discounted by the supermarket giants, following price cuts to milk, bread, toilet paper and washing powder by both companies in the past year.

The peak body representing vegetable growers, AusVeg, said the announcement was ''concerning'' because, while an oversupply of produce this season meant some growers would benefit in the short term, it was unclear what impact the price reduction would have on the industry over time.