THE NATIONAL Farmers' Union is reporting the Safeway supermarket chain to the Competition Commission over its plans to charge suppliers for in-store promotions.

The retailer has asked some of its growers and suppliers to pay pounds 20,000 in return for extra promotion of their products.

The NFU complained that the move was unacceptable and was handicapping smaller producers, many of whom are already strapped for cash.

The supermarket giant has written to 300 of its suppliers, promising a 15 per cent increase in sales for those paying pounds 20,000 for each product line.

In return for the money, the suppliers, which range from multinational firms to small fruit growers, are assured that their products will be promoted and guaranteed valuable shelf space.

But the NFU described the offer as "totally unacceptable and morally wrong" to expect producers to help to meet such costs.

"We would assume that ensuring the shelves at Safeway are kept well-stocked would be a fundamental requirement of any store," said Helen Lo, head of the union's food and marketing department.

The NFU warned that smaller growers would feel under intense pressure to contribute, fearing "commercial reprisals" if they failed to donate.

Richard Macdonald, the union's director general, said: "This extra payment is being suggested at a time of severe hardship within the industry. We believe Safeway must withdraw this request." He added that the union was also writing to Nick Brown, the Minister of Agriculture, and Stephen Byers, the Secretary of State for Trade and Industry.

The supermarket chain said it believed its initiative would satisfy customer needs which, in turn, would benefit suppliers.

Safeway also insisted that it would be happy to answer any questions from the Competition Commission, which is already investigating supermarket practices.