MEPs voted almost unanimously to adopt a report outlining pricing and supply agreements as "real problem areas" for food producers when dealing with retailers.
The report details how producer margins are being squeezed at a time when there is huge downward pressure on prices and how much supermarkets pay farmers.
Shoppers pay up to five times the cost of some food compared with the price at the farm gate. In the late 1950s, farmers received half the retail price of food.
The report said large retailers sometimes abused their positions and distorted competition to the detriment of shoppers and farmers.
A representative said: "We are concerned how supermarket price wars affect farm wages. Many dare not complain for fear the supermarket will buy goods elsewhere."
The report called for a Europe-wide probe into retail prices, a database to compare and contrast prices, and a hotline for consumers and farmers to report price abuse.
NFU campaigner James Ede said: "After a heated campaign, the importance of developing a fair supply chain is finally gaining recognition in Europe.
"The European Commission has answered NFU calls for more fairness in the food industry by recommending an EU code of conduct for the food-supply chain.
"Support from Europe is what we need at a time when the NFU is campaigning nationally for stricter codes of conduct and a supply-chain ombudsman to protect suppliers."