Premier Foods has reduced its level of trade credit insurance, The Grocer has learned.

A spokesman for the company, which is the UK's biggest food manufacturer, said the decision had been taken in partnership with the leading trade credit insurance agencies.

"Insurers have been looking at their level of exposure, given the current climate," said a spokesman for Premier.

"Premier has been working in partnership with all of its insurers to set its insurance limits at realistic levels."

The spokesman confirmed that the new insurance limits were lower than previous levels, but said it was not in Premier's interests to have excessive insurance.

"This move is to Premier Foods' advantage, and also to the advantage of our ­insurers, as it ensures they are not providing insurance to unrealistic degrees."

One supplier to Premier said the new insurance limits were causing some disruption of his trade with the company. "It's difficult, as I supply to several divisions of Premier Foods," he said. "Now I'm finding I have to wait for payment from one division before I'm able to dispatch to another."

The Food and Drink Federation said trade credit was becoming a serious issue for suppliers.

"The FDF is very concerned that in the current credit crunch credit insurers are starting to scale back on available credit insurance limits," said a spokeswoman.

"This is worrying in particular for small and medium enterprises, and could have a significant impact on their businesses given the current economic climate."