A supermarket price war “is the last thing farmers need”, rural groups have warned. Asda has cut prices on 1,500 products in an attempt to win back shoppers with a price war that has wiped billions off the value of its rivals.

The UK’s third biggest supermarket said the latest wave of cost cuts, on products including Cathedral City cheddar cheese, meant it had reduced prices on nearly 10,000 products since the end of January. But Tim Bonner, CEO of the Countryside Alliance, said: “On top of the huge challenges to the farming sector at the moment with the Government’s decision on inheritance tax and the withdrawal of the sustainable farming incentive scheme, I hope this isn’t the straw that breaks the camel’s back but it’s certainly another blow because we all know that the reality between the farming sector and supermarkets is that the supermarkets set prices and the farmers get what they pay.

“It’s going to be a pricewar across the major supermarkets and they know where their headline numbers are. They’re all on milk, vegetables, milk on farm produce essentially and they’ll be looking to drive those prices down and that is absolutely guaranteed to have a fundamental impact on farmers. They're going to get less for their produce as a result of that.

“Given everything else that’s going on in the sector, that’s the last thing that farmers need.”

Supermarket price wars are a “chilling prospect” for food growers, Liberal Democrat MP Alistair Carmichael said amid efforts to join up regulation covering shops and farmers.

He has urged MPs to back his Food Products (Market Regulation and Public Procurement) Bill, which secured its first reading on Wednesday.

The chair of the Commons' Environment, Food and Rural Affairs Select Committee said: “The market today has a handful of major supermarkets at the top – and hundreds of thousands of farmers at the bottom. The big players take their cut – and our farmers get whatever is left.

“Last week it was reported that grocery giant ASDA is threatening a ‘price war’ to take on rival supermarkets. For farmers who are already on the brink that is a chilling prospect. After all, in this price war we can be pretty sure that it will not be company executives who will pay the price, but the food producers.”

Asda’s chairman Allan Leighton vowed to “undertake a substantive and well-backed programme of investment in price, availability and the shopping experience”, amid efforts to regain customers’ trust in the brand.