LIZ Lynne, the Lib Dem MEP for Stourbridge and Halesowen, has today said that while the announcement of supermarket giant Tesco’s annual profits is good news for the economy, it is important large food retailers are not making their money by squeezing the UK’s farmers.

Tesco’s announced on Monday annual profits totaling £3.13 billion, up by 10 per cent on last year.

The unexpected results were largely put down to an extensive cost-cutting drive and the addition of new products to the cheap Tesco Value range.

But many farmers are worried about the effect of Tesco’s cost-cutting plans on their own pockets as further pressure to cut costs on the supply side of the business mean stronger demands on the already struggling UK farm industry.

Liz, who is the Lib Dem agricultural spokesperson for England and Wales in the European parliament, said Tesco’s good results were generally positive news for the economy but more must be done to ensure farmers do not fall victim to further price cuts.

In February last year, the European Parliament adopted a written declaration calling on the European Commission to investigate the full extent of supermarkets' powers over their suppliers and to propose measures to combat the problem. Liz today renewed the call for new measures aimed at protecting both the supplier and the consumer from potential abuse of power by supermarkets.

She said: “It is good news that even in the recession flagship UK companies such as Tesco's are weathering the storm. "However, it is absolutely vital that farmers are not forced to accept unreasonable prices for their produce in order for supermarkets to continue increasing their profits.

“We need to do more to prevent major supermarkets using their power to bully suppliers. It is important the European Commission urgently put forward plans to help better regulate the way supermarkets treat the farmers who supply them.

"I also believe that, at a national level, the UK Government should finally put in place the recommendations proposed by the Competition Commission and set up a supermarket ombudsman with the power to sanction supermarkets who abuse their position."