The number of food producers that fell into insolvency last year soared by 11%, according to new research from accountancy firm Moore Stephens.
The firm claimed food suppliers were still bearing the brunt of the ongoing supermarket price war, with their profits being squeezed as a result.
The research found that a total of 162 food producers became insolvent in 2015, more than treble the 48 insolvencies in the sector in 2010.
“The extreme buying and retail pricing strategies of big retailers mean smaller food producers are struggling to stay afloat. Food supplier insolvencies are still rising as small producers continue to be the major casualties in the supermarket price war,” said Moore Stephens partner and head of food advisory Duncan Swift.
“With no end to the price war in sight, food manufacturers are finding themselves less and less able to subsidise the aggressive buying tactics of big retailers.
“It’s not just the pressure on the headline supply price itself, there are concerns about when that price will be paid as 120-day credit terms are commonplace. Supermarkets also demand unilateral deductions from prices for a company to remain on their suppliers list.
“With the likes of Aldi and Lidl announcing further plans for expansion, competition between budget and traditional supermarkets is only going to heat up.”
Swift also called for stronger intervention from the Groceries Code Adjudicator.
“The Adjudicator recently issued its first censure of a supermarket for its treatment of suppliers, particularly regarding late payment and unilateral back-margin deductions - a long-anticipated move,” he explained.
“However, as these unreasonable behaviours are prevalent throughout the supermarket sector, for the regulator to begin to positively change these behaviours it needs to be prepared to show its teeth more often.”