The peak horticultural body for the Australian state of Queensland has criticized retailer Coles for its move to slash some fresh food prices by 50%, with concerns over the effect on grower returns.

Growcom CEO Alex Livingstone said while Coles has said it will maintain current levels of payment to growers, Coles' competitors may not.

"What we are likely to see is other retailers dropping their prices to compete with Coles but paying producers less, with the ultimate result of growers leaving the industry," he said.

"While the lower prices are good for consumers in the short term, in the long-term Australian producers will be driven out of the industry. A new United Nations report predicts that an increase in demand for food will outstrip supply in the next 20 years.

"Forcing farmers off the land will only increase Australia's reliance on imports and drive prices up as the increasing world population demands more and more food."

Livingstone said in the wake of floods in 2010-11, good rains have led to bumper crops for many fruit growers, which has already driven prices down.

"Coles may well be riding on the back of these already low prices with their campaign. The flipside is that retailers must be prepared to pay higher prices to growers when seasons are not so good, rather than expecting growers to supply at a loss in order to sustain artificially low prices to the customer.

"Consumers also need to understand that there is a basic cost of production and if farmers are paid consistently less than that then they will become unviable.

"This is a supply and demand market and growers are price takers. The concentration of market power in the hands of the big two supermarkets enables distortion of the market and it is highly unlikely that growers will be the winners in any price war."

Livingstone said Coles needed to demonstrate how its campaign would not impact on growers.

The campaign - sliced, diced and chopped

A Coles media release said prices would be cut on at least a dozen popular fruits and vegetables every week, including Truss tomatoes, Asian vegetables, Sundowner apples, cauliflower, Perino Snacking tomatoes, carrots, limes, red seedless grapes, peaches, sweet potatoes and rockmelons (cantaloupe).

The release said the new 'freshness' campaign would have savings for growers and be good news for Australian growers who have produced a bumper crop. The retailer says it will increase sales, which provides a more certain market for Australian growers.

"Quality fresh produce is the most important part of our offer to customers. They rightly expect the very best quality but price is an increasingly important factor for many when choosing what to buy and where to buy it," said Coles fresh produce general manager Greg Davis.

"We have worked closely with our growers to transform our fresh fruit and vegetables offer, investing in new growing techniques, quality control, in store displays and lower prices for customers.

"I'm also proud of the fact that over 96 per cent of Coles' fresh fruit and vegetables are Australian grown. We always source at home whenever we can and only look further afield when we can't buy sufficient quantities of quality Australian product. And we even try to be more local by sourcing and selling locally grown produce within States where possible."

www.freshfruitportal.com