Kettle Produce is to cut 100 jobs and has warned it is likely to post a loss in its full-year results.

The company, one of the largest UK suppliers of prepared vegetables to the multiples, said it was axing 100 of its 950 staff on the back of increased production costs and tough market conditions.

The company was now predicting significantly worse results than in the previous two years and expected to record a loss for the 2008/09 financial year, said MD Susie McIntyre.

In its most recently published results, for the year to 2 June 2007, Kettle recorded turnover of £71m, down from £74m the previous year. However operating profit improved from £454,000 in 2006 to £1.9m.

"We have experienced a difficult trading period over the past six months in what is a fiercely competitive market and we have no option but to take these steps to safeguard the wider interests of the business," McIntyre added.

Other staff within the company affected by the restructure would be offered alternative roles, she said. The trade union Usdaw confirmed it was in the early stages of a 90-day consultation process with the Fife-based business.

Kettle's predicament underlined the challenges veg producers, and UK food suppliers generally, were facing as a result of retailer pressure, according to NFU Scotland.

"Retailers must realise that their cut-throat tactics are in danger of jeopardising the supply of local quality food their customers are increasingly calling for," said NFUS president Jim McLaren. "Retailers seem incapable of thinking beyond the supply of the next truckload of fresh produce at the back door of the store."

This week's move is not the first time the company has shed staff in recent times. In 2005, the company streamlined operations with the loss of 39 jobs.

Kettle produced 50,000 tonnes of fresh produce last year, including root veg, green veg and salad crops, from sites both in the UK and in Europe.