Profits at Riverford Organic Vegetables have nosedived after the veg box operator refused to pass on soaring supply costs to customers.

Pre-tax profits for the year to 2 May 2009 slumped from £1.2m to just £83,600, newly filed accounts show, with turnover falling slightly from £33.1m to £32.7m.

Riverford had been badly affected by poor UK weather during the period and had to write off some crops, admitted MD Jack Slatter. When the company then increased imports to ensure it could still meet supply, it was hit by poor exchange rates.

"We did import more product than we would normally and did not pass any of that cost on to our customers," he said, adding that paying fair prices to domestic producers who had suffered from poor yields had also pushed costs up. "We have to take the rough with the smooth and that year was pretty rough."

Slatter predicted this year's results would be better. Riverford had had a "cracking Christmas" and maintained its market share and customer base in the recession, he said.

Although weather in the first week of January had hit sales, 2009 had generally been favourable to veg production, he added. "We had quite a warm October so were still growing salad products at home."

The business had recently purchased a farm in France and was now buying Spanish produce direct from growers instead of via wholesalers, giving it a stronger supply base on the Continent, he said.

Slatter claimed the organic industry was on the road to recovery: "I'm confident we're going to see a resurgence in consumer interest in organics."