Coles and Woolworths are continuing through 2013 their battle for supremacy in the supermarket industry by renewing their milk price war. Both retailers have cut to $1 per litre their milk products.

Coles fired the opening salvo by bringing down to $1 per litre its milk products across over 600 Coles Express outlets in Australia. In response, Woolworths matched the offer by retailing two litres of milk at $2.

Besides milk, there is also a bread price war as the two retailers also reduced the prices of their brand bread to $2.30.

The collateral damage over the marketing battle is on traditional corner shops and dairy farmers which had previously been caught in the crossfire between the two supermarket giants' running price war on basic commodities.

With the resumption of the milk price war, Brian Tessman, the president of the Queensland Dairyfarmer's Organisation called on consumers to boycott the lower-priced Coles Express milk and instead support local independent corner stores.

"2012 was supposed to be the Year of the Farmer, but anyone looking at the dairy cabinet in a Coles supermarket would not have known it," Which4U quoted Mr Tessman.

However, Jon Church, corporate affairs chief of Coles insisted the price war would not place pressure on independent convenience stores since the volume of milk and bread sold at Coles Express is very small compared to Coles supermarkets.

"We have aligned prices with supermarkets because customers told us they did not understand why they should pay more for the same product at Coles Express. We thought they had a point and so we now offer the same price for these products whether bought at our convenience stores or supermarkets," Mr Church said in a statement.

In response, Mr Tessman said, "With Coles' profits up 16.3 per cent on the previous year, it is hard to see how Coles and its executives are showing a fair regard for the farmers that supply fresh milk to their stores, every day of the year."

But Coles insisted that since it reduced milk retail prices two years ago, milk production in Australia even rose for the first time in 10 years, debunking dairy farmers' fear of losses caused by the price war with Woolies.