Food firms forced to close by price wars

Food producers are being forced out of business by the ongoing supermarket price war, a new report has said.

Research by accountancy firm Moore Stephens found that 146 food producers have entered insolvency this year, up from 114 in 2013, after retailers are using suppliers as “cannon fodder” to cut prices and boost profits.

'Supermarkets have engaged in questionable buying practices for years, but it's getting worse and clearly wreaking havoc on the UK food production sector,” said Moore Stephens partner, Duncan Swift.

'The supermarkets are going through the bloodiest price war in nearly two decades and are using food producers as the cannon fodder.”

He added that the fear of losing business from supermarkets means that food producers rarely complain about clear breaches of agreed industry standards.

But the comments have been dismissed by the British Retail Consortium (BRC), which said that all supermarkets build long-term and sustainable relationships with suppliers.

“It is far too simplistic to blame retailers for this. Firstly there may be a number of reasons for failure and we don't know if they supply retailers, and even if they do they are likely to have other customers,” a BRC spokesperson told the BBC.

The spokesperson said that retailers operate in a “highly-regulated supply chain” with a strict code of practice governing contracts, and an adjudicator to ensure fair dealing.