Supermarkets using food producers as ‘cannon fodder’ - Palmers Solicitors
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Supermarkets using food producers as ‘cannon fodder’

Food production businesses saw insolvencies soar by 28 per cent in the last year, according to new research.

Figures published by accountancy firm Moore Stephens on 24 November revealed that 146 food producers entered insolvency in 2014 compared to 114 in 2013.

In contrast, there was an eight per cent fall in company liquidations in the economy as a whole over the same period of 2014, the 12 months to September.

Duncan Swift, who leads Moore Stephens’ food advisory group, said: “The supermarkets are going through the bloodiest price war in nearly two decades and are using food producers as the cannon fodder.

“The fact that food producer insolvencies are rising so rapidly, while business insolvencies are falling overall, shows just how much pressure the sector is under.

“UK supermarkets are trying to compete on price with Aldi and Lidl but with profit margins that are far higher than these discount chains. To try and make the maths work, the big supermarkets are putting food producers under so much pressure that we have seen a sharp increase in the number of producers failing.”

He added that the rate of financial failure was likely to be even greater than it appeared, as most farmers and many horticulturalists operated as sole traders or in simple partnerships that were not recorded at Companies House and could not be readily researched.

Whatever their sector, businesses facing financial challenges should always seek professional advice, at the earliest possible stage, to help identify practical solutions to their difficulties. Palmers can provide expert advice on a wide range of insolvency matters – for more information, please visit our website or contact Andrew Skinner.

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