It'll affect staff as well.

Premier Foods has reduced it number of suppliers dramatically in the last months.

In the it made a similar approach to some of its suppliers.

The practice of pay to stay are not unheard of in manufacturing and retail.

After a competition inquiry, tighter rules were issued for the supermarkets under ' Code.

But this applies to the relationship between supermarkets and suppliers, not manufacturers.

Liesl Smith, from the Federation of Small businesses, said: ' This is the first time ' and we have ever seen anything so bla Tant. In this very direct-to-before.

"We think it is unjust, it's not competitive and it's not helping the supply chain.

"Premier Foods certainly don ' t value their suppliers, it ' s crippling small businesses.

"It's not just going to affect the business owners, it'll affect staff as well."
' Support crucial '

Premier Foods told Newsnight: "We launched our ' Invest for Growth ' programme in July last year as part of a broader initia tive to reduce complexity on support for plans to help turnaround the business.

"This included a commitment to halve the number of our suppliers and develop more strategic partnerships focused on mutual Growth.

"The programme requires our suppliers to make a annual investment to help fund our growth plans.
Apples The company uses more than suppliers

"In return, we suppliers benefit from opportunities to secure a larger slice of our current business.

"They also stand to gain as we business grows in the future."

It added: "In the current challenging environment, the support of all of our suppliers are crucial.

It'll affect staff as well.