Having taken part in the supermarket price war with rival Woolworths, Coles has reiterated that dropping grocery prices significantly is not hurting Australia’s agricultural sector.

Speaking to a room of investors at a Wesfarmers briefing, Coles managing director Ian McLeod said the price reductions are part of the company’s ‘Australia First’ sourcing policy of partnering to deliver efficient and quality supply.

“We recognise we do have to make sure we support the Australian dairy industry and the Australian agricultural industry because there’s no point in damaging industries our customers want to buy from,” McLeod said.

“And there’s a strong bias and we recognise that and we want to embrace it and we are working hard on that.”

While Coles has been criticised for reducing milk prices down to $1 a litre, it has managed to save consumers $800 million. It is also delivering 96 per cent of Australian grown fresh produce while 75 per cent of Coles brand are Australian sourced while Coles brand has the most ‘Australian made’ products in the country.