The future of up to 25 fresh produce businesses and their suppliers hangs in the balance following a controversial review by the Rural Payments Agency that could see vital financial support withdrawn.

The bodies have been left in limbo after the ­review cast doubt over whether they can be deemed ‘producer organisations’ under the EU’s Fresh Fruit and Vegetable Aid Scheme, which offers funding for efficiency improvements.

If the RPA decides they do not qualify, these companies would no longer be able to reclaim money for such improvements which have already been made.

Northern Mushrooms, which supplies Morrisons and Netto through marketing arm Greyfriars, claimed it was owed between £600,000 and £800,000.

“The Rural Payments Agency has withheld sums due to about 20 to 25 producer groups and thrown these organisations and their members into absolute chaos,” said John Smith, director and former chairman. “The situation for many is very serious indeed.”

Northern had made ­improvements on the expectation it would be reimbursed under the scheme, and the RPA had approved the company’s plans before it had secured financing through loans from its producer members.

If payment was not forthcoming, it might not be able to pay its staff at the end of this month, Smith admitted. “The consequences of us not getting it are just too dire to contemplate.”

A source from another producer organisation described the situation as an “absolute mess” and warned of a major fallout if the RPA did not change its mind. “I would expect some companies to go under without a shadow of a doubt,” the source said.

The RPA will reconsider the status of POs whose standing it has questioned after requesting further evidence from them.

“We’ll continue to work with the industry to make sure they’re kept updated,” said an RPA spokeswoman

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