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Food from overseas is winding up on supermarket shelves labelled as Australian made because of unclear country of origin laws, according to the Australian Greens.

The minor party has legislation before the Senate calling for better labelling laws so consumers can easily identify locally grown food from among imported produce.

Currently imported food that's significantly changed or manufactured in Australia can be labelled Australian grown, a situation the Greens claim threatens local farmers.

Greens leader Christine Milne said a packet of frozen vegetables with a map of Tasmania on the front may in fact largely be comprised of imported produce.

"People would have had no idea about that because of the way labelling currently is," she told ABC radio.

She dismissed claims from industry that the laws would increase costs for farmers as a "complete exaggeration".

AusVeg, the peak industry body for vegetable and potato growers in Australia, has backed the legislation calling for clearer labelling.

The group said produce from China could be sent to New Zealand, repackaged there and exported to Australia with the label "made in NZ from local and imported ingredients".

"Often this produce from China is actually grown in conditions that would not be permitted here," AusVeg's Hugh Gurney told ABC radio. "We feel this is quite a deceptive practice."

Under the Greens legislation, food would carry a "processed" or "manufactured in Australia" label so it's clear what was grown and packaged in Australia and what was not.

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