A group established 16 years ago to kickstart a food revolution in the region has collapsed after being hit by public sector cuts.
Heart of England Fine Foods (HEFF), which was set up in 1998 to boost food and drink businesses in the West Midlands, has begun voluntary liquidation after suffering from a fall in funding.
A total of 15 jobs will be axed as a result - but directors warned hundreds of posts in the food and drink sector in the region were under threat by losing a valuable ally.
Directors say the business has become unfeasible after a six-year contract with Shropshire Council to manage the Shropshire Food Enterprise Centre ended.
The operation has also struggled after funding, initially allocated in January 2014 from UK Trade and Investment to support international work, failed to materialise.
In a statement, directors said there would be a knock-on effect to the food sector in the region.
It states: "We believe the Government is short sighted in not recognising the added value HEFF brings to the food and drink industry and the contribution made to the economy through its activities.
"The closure of HEFF will have significant repercussions for business across eight of the English counties. Whilst the immediate job losses at HEFF will be 15, the knock-on effect is likely to see hundreds of jobs within small businesses put at risk.
"Over the past 16 years, it is estimated that HEFF has generated in the region of £90 million gross value-added through its work, created and safeguarded in excess of 2,000 jobs and supported at least 2,800 food and drink manufacturers."
The directors accepted there had been slow trading across many areas of the business although the collapse comes just months after what appeared to be a new dawn for HEFF.
It was thought the group had a new lease of life after a move to Shrewsbury College of Arts and Technology in March 2014 but it proved to be unviable.
The group was originally established with government funding to support start up businesses and SMEs within the food industry.
Since 1998, HEFF has successfully delivered 17 contracts funded through either central government, Advantage West Midlands, local authorities or the European Regional Development Fund.
HEFF's directors added: "Whilst the company still has healthy reserves, it continues to trade at a loss and we do not genuinely expect we will be able to trade out of our current financial difficulties in the short term.
"Having taken professional advice, it is clear that, to date, HEFF has acted in line with its fiduciary duties and in the best interests of the business.
"But to ensure the company does not enter into Wrongful Trading the only course of action open to us is to go into voluntary liquidation.
"While, over the next quarter, we would have liked to wind the business up ourselves unfortunately, this is not feasible due to cash flow issues."
Directors say they are still hopeful a solution may be found before a meeting for shareholders which will be convened by Rimes and Co on July 9 at 11am at Stone Manor Hotel Kidderminster.
A liquidator is expected to be appointed after the meeting.
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