Morrisons will make immediate payments to smaller businesses and re-classify suppliers to help 1,000 more firms as it moves to protect its supply chain from the impact of coronavirus.
The grocer will temporarily scrap its 14 day payment terms and pay small suppliers as soon as an invoice is received.
Morrisons also said it will also re-classify a smaller supplier from those with turnover of £100,000 to those with £1m in business, meaning an extra 1,000 businesses will benefit from the new payment terms.
The supermarket, which will start the temporary payment terms next week and review them in May, has 3,000 small suppliers including 1,750 farmers that will benefit.
Morrisons chief executive David Potts said: “We are Britain’s biggest single foodmaker and we want to be there for the smaller foodmakers, farmers and businesses that supply Morrisons.
“We’re a British family business and we will be doing our best to support them through this challenging period.”
Environment secretary George Eustice added: “These measures will support our farmers and food producers in their vital work of feeding the nation.
“We already have a highly-resilient food supply chain in this country and I am continuing to work closely with Morrisons and other retailers on their response to coronavirus.”
Supermarkets have been forced to ration essential food and household items as panicked consumers stockpiled toilet roll, pasta and antibacterial gels, wipes and sprays.
Tesco limited customers to buying no more than five of each rationed goods, while Waitrose introduced a temporary cap on some items on its website.
Meanwhile, it was reported last week that one of the UK’s biggest supermarkets , which includes Asda, Morrisons, Sainsbury’s and Tesco, had called on the government to suspend the rule that prevents them from working together.