The Rural Payments Agency has warned Producer Organisations in the fruit and vegetable sector that they may face a delay to aid payments this year.

About 15 Producer Organisations who submitted a claim for an in-year payment under the Fruit and Vegetables Aid scheme are not currently being paid in accordance with the RPA’s payment targets.

“Given the issues raised by EU auditors, which have serious implications for the industry and for taxpayers, it is right that we’ve warned Producer Organisations that RPA may not be able to meet its published target dates for payment,” an RPA spokesperson said. “We and Defra are working to resolve the situation as swiftly as possible.”

The UK has 46 POs, drawing around £27m a year of EU support. This aid is match-funded by the POs and their members.

But John Smith, chairman of one of the PO’s affected, Northern Mushrooms, said the suspension of payments could have dire consequences and he called for approved payments to be made immediately.

“In order to recover matched funding as part of the Fruit & Vegetable Aid Scheme, approved measures must be funded, in the first instance, by levies and loans from PO members.

“In reality the loans are often made by banks, safe in the knowledge that the RPA will be reimbursing POs which in turn will then reimburse their banks. The task of raising funds is now made doubly difficult if the banks think the RPA may be about to renege on existing commitments. This leaves the totality of funding down to PO members.”

Mr Smith said the fresh produce industry struggled to make a 2% net margin and few horticulturalists had vast reserves of cash. There was real concern that many PO programmes, were “about to hit the buffers”.

A new Producer Organisation working party, consisting of Defra, the RPA and representatives of Producer Organisations, has been set up to clarify guidance for the sector to ensure EU requirements are met for the fruit and vegetables regime.