Plans by Tesco to invest another £100m in a combination of permanent price cuts and promotions as it continues its price war with other supermarkets has sparked an angry response from the Farmers Union of Wales.

FUW president Gareth Vaughan said there was a real risk that the retailer would seek to recover this money from farmers by paying less for their produce and forcing suppliers to meet unfair terms. "A downwards spiral in prices paid to farmers will simply add to the economic crisis and should be resisted,” he said.

This latest move reinforced the need to create an independent ombudsman to enforce a stronger code of practice on the supermarkets, he said. “Last April the Competition Commission fully endorsed our campaign and called for an independent ombudsman in order to regulate unfair practices by supermarkets.

“At the time we warmly welcomed their report which followed bitter complaints from farmers and other suppliers over many years that unfair terms and prices were being forced upon small producers in order to satisfy the greed of large retailers."

But an ombudsman had still not been appointed.