West Sussex retailer Crumbs has launched what it claims to be the first fair trade scheme for UK farmers and producers.
Suppliers within a 40-mile radius of Crumbs' store in Washington will be paid a premium price of at least 5% over what suppliers from further afield will receive.
They will also be able display a Local Fair Trade logo on goods.
The initiative was designed to "restore a just and sustainable local food system", said Crumbs' joint founder Simon Croft.
"When most people think of Fairtrade they think of tea growers in India. What we want to draw attention to is that UK producers and farmers are struggling too and may not even be able to pay themselves the minimum wage."
The first supplier to sign up is Southview Dairy in Bury, West Sussex. Its milk will be bought and sold at a 6% premium.
About 10-15 of Crumbs' 90 suppliers will qualify for the scheme, Croft said.