“Offshop”, which will arbitrate disputes between supermarkets and suppliers, must be given powers to conduct unannounced audits at food companies, farmers’ leaders say.

The farming industry senses victory after a five-year battle to persuade the Government and competition authorities that suppliers have been losing money because of tactics used by supermarkets to keep up their profits. But senior figures are cautious about a farm prices champion until they read the small print of the Competition Commission’s provisional findings.

Supermarket chiefs are already preparing a new assault on the plans. Lucy Neville-Rolfe, of Tesco, said: “We do not believe it would be in the best interest of consumers if the industry had additional burdens placed on it which reduced flexibility and efficiency for both retailers and suppliers.”

Among farmers there is some concern that if the regulator is too powerful and retailers are restricted by new red tape, they will find it easier to buy food from abroad, where they will not be subject to the same trading rules. One source said: “We must be careful that UK farmers are not just producing the niche free-range and premium brands for the middle classes.”

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Nevertheless, farming chiefs are adamant that the regulator must be given clear instructions to be pro-active, make random spot checks on companies and investigate any complaints or claims made by suppliers. They would like him to keep check on company paper trails and e-mails with suppliers even without a specific allegation to keep retailers on their toes.

One source said: “If the regulator can pounce at any time we are convinced that will be the end of the problems. It’s like having speed cameras – people slow down or they know they will get caught.”

Farmers are also insisting on the anonymity of the complainant at least in the early stages of any inquiry by “Offshop”. Otherwise, they argue, there will be little difference from the voluntary code of conduct set up in 2002, which was intended to iron out grievances between suppliers and leading retailers. It has not worked because suppliers have been too afraid to make complaints fearing they will lose contracts.

This code was set up under the supervision of the Office of Fair Trading but since 2002 there have been 17 complaints, and not one has resulted in any adverse findings against a supermarket. Four cases lapsed because complainants fearing recriminations a threat to the long-term viability of their businesses were unwilling to proceed against a retailer.

The “climate of fear” among suppliers was identified by Peter Freeman, the commission chairman, during the inquiry. He has heard powerful evidence in private meetings how the stranglehold of the supermarkets has depressed prices.

The present voluntary code is therefore to be enhanced and placed on a legal footing. It is also to be revised. One addition to the code – demanded by retailers and farmers – is to set out a formal process that lays down the conditions in which a supermarket can sever ties with a supplier.