Plimsoll’s latest report confirms that zero growth, sliding profits and escalating debts have pushed a third of the UK Fresh Produce industry to the brink of failure.

The publisher’s financial health check for each of the top 1,200 companies in the UK fresh produce industry reveals that consolidation is essential as supply is outstripping demand. All companies are having a difficult trade off between protecting margins and appeasing price-sensitive customers.

Each of the UK’s largest fresh produce companies is awarded one of five financial ratings based on its overall financial performance. Ratings have been given as strong, good, mediocre, caution and danger.

David Pattison, senior analyst on the project said the 199 firms rated danger are of most concern. These firms are being hit the hardest. The numbers are stark - profit margins falling to only -1 per cent of sales, and the majority of companies in this classification are making a loss. Most are taking on debt at an alarming rate simply to cover costs.

“I think these figures just prove the point that we have all been aware of that a period of consolidation is long overdue,” said Pattison. “Bit by bit the weaker players will be removed from the market.”

The report suggests that up to 266 companies might need to shed jobs, but for some businesses as many as 30 per cent of the payroll may have to go if the company is to survive.

“These companies [rated danger] must put immediate plans in place to start to trade their way out of their problems,” said Pattison. “Cutting costs, jobs and even turning unprofitable work away - stringent measures must be put in place before it’s too late. Currently the owners are sitting on an unsaleable asset and are woefully exposed to acquirers who are ready to snap them up for next to nothing.”

The 554 companies rated as strong and the 115 as good offer some room for optimism. Benefiting from stronger business models and tighter financial management these companies are ideally placed to benefit from the fall-out in the market. The report rated 198 as mediocre suggesting that this is a make-or-break year for them and 134 are in a weakening financial position.