Australians wasted $8.9 billion of food in 2018, which was a 7 per cent reduction from the previous year. 

The Food Waste Report, released by rural-focused lender Rabobank on Friday, found households across the nation binned an average of $890 of food last year or about $74 a month. 

A state-by-state breakdown revealed Tasmania and the Northern Territory were the least wasteful with households disposing of 9 per cent of food purchased last year.

Rabobank's head of client experience Glenn Wealands said Tasmania was establishing a benchmark in reducing waste across Australia.

"Tasmanians are closer to the source of produce and ... the closer consumers understand the source of their food and what is involved in producing it, the more likely we are to appreciate it and the special commodity that it is," he said.

The top three reasons for food wastage was food expired before it was finished, too much food was purchased and food not being as good as expected.

Not planning meals sufficiently and children not eating food prepared for them were also high-rating reasons for wastage. 

Ways to reduce wastage include using a shopping list when grocery shopping, eating leftovers, planning meals in advance and freezing food.

Mr Wealands said Tasmanians were leading the charge in embracing imperfect produce. 

"Tasmanians are leading the way in Australia in being aware this produce exists and incorporating into their diet," he said. 

Food waste was more common among younger generations, with Gen Z (people born mid-1990s to mid-2000s) wasting more than double the groceries of baby boomers (people born between 1946 and 1964).

"The younger generations really need to be assisted in terms of the education and awareness of what food waste looks like," Mr Wealands said.