Britain’s farming industry could be reduced to a memory “within a generation”, the Church of England cautioned yesterday.

The Church criticised the British obsession with cheap food and accused supermarkets of putting farmers’ livelihoods at risk. The Church, which owns 125,000 acres (50,000 ha) of agricultural land as well as being an investor in the retail food industry, said that supermarkets were guilty of “invisible and pernicious practices” that were squeezing prices at the farm gate. Without change, the agriculture industry will diminish, with profound implications for all.

In a report submitted to the Competition Commission by its ethical investment group, the Church calls for an independent ombudsman to be appointed to put an end to practices such as labelling foreign food as British and arbitrarily slashing the prices of vegetables. The Bishop of Exeter, the Right Rev Michael Langrish, who chairs the Church’s rural strategy group, said: “The business practices of the major food retailers have placed considerable stress on the farming community through the use of methods which we believe to be unfair and of which consumers seem to be unaware. Farmers seem to be unwilling to complain or to expose these practices for fear that their produce may be boycotted by the major retailers.”

The report says that many farmers are producing goods below cost, meaning that their businesses are unsustainable. As a result, many are going under. It says that the “big four” supermarkets have such a monopoly over the food chain that they are able to squeeze farmers indirectly by squeezing the middlemen. “Consumers do not appear to be aware of the full extent of the supermarkets’ monopoly and power,” the report says. “Farmers are not asking for special treatment but there is inequality and dysfunction within the supply chain requiring attention.”

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To compile the study, Fair Trade Begins at Home, members of the ethical investment advisory group spoke to 50 farmers in most types of agricultural production in Devon, Somerset, Cheshire, North Yorkshire, Kent, Sussex and Hampshire.

Some farmers refused to meet them because they feared damaging their future relationship with the supermarkets. Those who did speak to the study detailed experiences of “invisible and pernicious” practices that the consumer was largely unaware of but had been accepted by farmers as a “fait accompli” as part of the price of doing business, the report says.

Many farmers pay for supermarkets’ own promotions, it said.

In one instance, a vegetable farmer received £7 a tonne – putting the cost of production well above any viable economic return – instead of £14 after a supermarket decided to promote vegetables at a special offer.

Another farmer had 1,000 tonnes of potatoes worth £120,000 rejected by a supermarket after growing them to order because they “cooked to the wrong colour”.

A cheese producer also told the study of a supermarket’s decision to withdraw overnight when the buyer changed after taking a year to produce a cheese for a promotion.

The report also found that some buyers could telephone a farmer just as a lorry was leaving for an abattoir to reduce an order. The abattoir would take on the full delivery, leaving the supermarket able to pay for only what it required.

Farmers had also complained about deductions made from invoices where produce clearly met all the requirements.

The report also said that there were instances of misleading labelling systems being used by supermarkets with many consumers unaware that despite the appearance of being British – through the use of a Union Jack or naming – many products contained underlying ingredients imported from around the world.

Commenting on the report, an Asda spokesman said: “Treating suppliers fairly while ensuring we always get the best deal for our customers is at the heart of how we do business.”

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