Graham Furey said: "There has been a recommendation for an Independent Ombudsman to regulate the UK Grocery Market. Reluctantly we believe this is the only option for the EU.
"We certainly welcome the fact that MEP's have taken this issue on board and are now considering what the options are.
"The EU Commission will also be releasing findings of their initial investigation into the current state of EU retail market in December. We now have an opportunity to create structure which will help farmers get a better deal from the supply chain."
Addressing the EU Parliament Land Use and Food Policy Intergroup, Graham Furey said: "Supermarkets are a very important route to market for farmers. However our view is that the EU grocery market and its supply chain are not functioning correctly. Producer margins are being relentlessly squeezed through unsustainable downward pressure on price.
"This seems particularly acute in the UK where there is ferocious competition between the major retailers on price and this inevitably puts a downward pressure on farm gate prices.
"If left unchecked, we believe that such market practices will in the long term impact directly on consumers in terms of their choice, availability and quality of food that is available. Do we want to consider a future where European consumers are reliant on food from South America and South East Asia. At a time when the reality of global food shortages is upon us, this would make no strategic sense for Europe.
"In the short-term, retail price wars translate into lower prices for consumers, but these are often funded by reduced margins elsewhere in the food chain, to the point where many food producers and suppliers receive prices below the cost of production. Some have suggested a voluntary code of practice for the industry but this has not worked in the UK.
"Therefore, with disappointment we only see a legislative framework achieving long term solutions. We believe this would include the creation of a pro-active independent ombudsman and associated code of practice, and protection for those who complain.
"The independent auditor must have the powers to go into the European marketplace and investigate / monitor supply chain relationships, irrespective of whether a complaint has been made."