Supermarket price wars are taking their toll on Produce Investments, the Berwickshire-based potato grower with an Alternative Investment Market listing.

The shares fell 17 per cent yesterday as Produce, which also grows daffodils, warned that profits in the year to June 27 would be substantially below expectations.

The company said: "Both the value and volume of fresh potato sales have been negatively impacted during the last 12 months. In order to compete with the discounters the big four retailers have had to invest significantly in lower retail price points for key staples, potatoes included, and this has led to price pressure down the whole supply chain."

Earlier this week it was revealed that the value of potato sales in Scotland had crashed from £170m to £105m last year.

The AIM-listed company had warned in late September that prices were expected to come under pressure, with supply expected to outstrip demand. It cited an exceptional 2014 growing season, which produced a large crop of potatoes across much of northern Europe, combined with lower consumption of fresh potatoes.

It said yesterday: "The volume performance has improved during recent weeks but deflationary pressure remains on the value of fresh potato sales. Looking to the future, Produce is working with its core retail customers to create a supply chain model that is more aligned to the prevailing market conditions in any given season, therefore reducing the impact of crop variations on the group's financial performance."

It said the daffodil harvest was now well underway in Cornwall "and early indications are very positive with sales ahead of last year".

Produce said it remained cash generative and was committed to its long term strategy of widening both its product base and customer base, creating a more diverse business model for the future. "It also remains committed to the long term development of the GreenVale brand and sales of this product remain in-line with the company's expectations."

The shares fell 28.5p to 140p.