Critics who say the big supermarkets' enormous buying power is putting suppliers out of business are barking up the wrong tree, according to British Retail Consortium boss Kevin Hawkins.

In a staunch defence of his members, the BRC director general said the conduct of the multiples had nothing to do with the exodus of farmers from agriculture - a view branded as "ridiculous" by farmers' leaders.

Big retailers were facing struggles of their own, with huge increases in costs, and operated in a mature market with little prospect of significant growth, he said.

Manufacturers who ­supplied supermarkets enjoyed healthier profit margins than their customers, he added.

The decline in farmers' share of the value of food reflected a decline in demand for traditional commodities, said Hawkins.

"There is no evidence that it is due to downward pricing from a few large supermarkets. The retail/farmgate price gap is no wider in the UK than in the rest of the EU. Over-production has a greater impact on supplier profitability. For example, we still produce 14 billion litres of milk a year despite a 40% fall in consumer demand over the past 30 years."

He added: "Supermarkets are operating in a mature market where food sales are unlikely to grow. Retailers' fixed costs are rising well above the Retail Price Index. The minimum wage has risen by 25%, energy by 50%, transport by 15% and rents and rates by between 5% and 10%. Food inflation has been below the RPI for a decade and the real cost has dropped by 15% over the same period. Supermarkets' net profit margins therefore have been falling, which means that cost reduction is now a top priority for supermarkets, especially in the supply chain.

"Food manufacturers average operating profit is more than 7%, which is more than double that of supermarkets."

Hawkins' comments about the profitably of manufacturers - a line of argument he has pursued in the past - is given credibility by the latest survey of global food and drink suppliers produced for The Grocer by OC&C Strategy Consultants. This indicates that operating profit margins at top suppliers have risen 0.5% to an average of 16.2% in the past year.

Farmers, however, reacted angrily to Hawkins comments. NFU food chain head Kevin Pearce said: "I wouldn't blame supermarkets for all farming's problems, but it's ridiculous of the BRC to say they are not to blame at all. This is the holier than thou attitude we continue to see from BRC. They are washing their hands and walking away."

Hawkins was speaking at a conference in Edinburgh on Monday, convened to discuss the Competition Commission's inquiry into the UK grocery market. This week, members of the inquiry team were in Scotland to hold personal hearings as part of their investigation (see page 8).

Earlier at the conference, the Office of Fair Trading's head of supermarkets, Chris Jenkins, said that it was not clear whether the growth of supermarkets across the UK had come at the expense of convenience stores.

"The convenience sector is growing faster than total food retailing, with symbol outlets gaining greater market share as well as supermarkets," he said.

OC&C Global Giants, p32