Last month Newsnight exposed the use of ‘pay-to-stay’ techniques on small suppliers allegedly made by one major food agent.
Julie Palmer, a partner at Begbies Traynor, said: “Unless the supermarkets start treating their suppliers more fairly and find longer term solutions to their cost cutting exercise, we expect that more than 100 of these 1410 significantly distressed food and beverage suppliers will fall into administration before the year is up.
“Worryingly, with 3.6M people employed in the UK food supply chain, the economic and political risks associated with the current price war are now reaching boiling point ahead of May’s election.”
“Adding to their misery, the UK’s food producers and suppliers have failed to see any benefit from the rise in popularity of the German discounters Aldi and Lidl, since much of their canned and packaged stock is sourced from overseas.”
Begbies Traynor used financial data to probe firms in the sector that have traded for more than a year. It labels a company as being in “significant distress” if it has a county court judgement against it of less than £5,000, or if it has a poor credit score.
