Morrisons speeds up payments to small suppliers because of coronavirus

Morrisons is to speed up payments to its smallest suppliers to help them with cash flow during the coronavirus outbreak.

From next week, suppliers who sell less than £1m of goods a year to the supermarket will receive payments within 48 hours rather than the usual two-week window, benefiting about 3,000 small businesses – more than half of whom are farmers.

The supermarket, which will report annual results next week, said it would be operating the new system until at least the end of May, when it will be reviewed. The chain has also reclassified 1,000 suppliers to enable them to benefit from the policy change.

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David Potts, the chief executive of Morrisons, said: “We are Britain’s biggest single foodmaker and we want to be there for the smaller foodmakers, farmers and businesses that supply Morrisons. We’re a British family business and we will be doing our best to support them through this challenging period.”

The environment secretary, George Eustice, said: “These measures will support our farmers and food producers in their vital work of feeding the nation.

“We already have a highly resilient food supply chain in this country and I am continuing to work closely with Morrisons and other retailers on their response to coronavirus. The government has pledged £30bn in this year’s budget for those affected and we’ve been clear that we will do whatever it takes to support people and businesses.”

Supermarkets continue to see unprecedented sales levels for this time of year as shoppers stock up on essentials in preparation for self-isolation amid fears of shortages caused by factory or retail shutdowns.

Suppliers and retailers are struggling to keep up with demand that is on a par with Easter or Christmas, events that normally involve months of planning, and this is understood to have put pressure on some suppliers’ cash flow.

Some small producers may also have suffered a slowdown in trade because of interruption to exports or lower orders from hotels, restaurants and other hospitality businesses as people stay at home. With stockpiling focused on store cupboard essentials such as toilet roll, cleaning products and tinned or packaged goods, some fresh produce has not sold as well in stores.

There are also concerns that some suppliers will suffer from staff shortages as people become ill, or ingredient or component shortages because of unexpected high demand and problems with importing goods.

Fresh produce traders at New Covent Garden Market in London, who supply large restaurant chains, pubs and hotels, have seen demand dive by up to 60%, according to the Fresh Produce Journal trade magazine.

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