Birmingham’s restaurant, hospitality and independent retail trade could be hit hard if Birmingham’s wholesale markets fail to find a new home it has been claimed.

Hotels, restaurants, caterers and small shopkeepers in the region will be forced to travel further afield and pass the increased fuel and delivery costs on to their customers.

Last week the Wholesale Market traders were told that the council is looking to move them off their Pershore Street site during 2013. This was just days after the council cabinet decided to pull the plug on a deal to build a new wholesale market at Witton, citing the withdrawal of public funds due to the collapse of Advantage West Midlands and worsening council finances.

The market site has long been earmarked for redevelopment as part of the growing city centre and outlined in last year’s Big City Plan. But now there will be no cash raised from the sale of the site to help fund a replacement as was originally planned in the Witton deal.

Instead a private investor is being sought to wholly fund an alternative facility in the city, perhaps at Longbridge or Saltley, and it is not surprising the traders are far from optimistic that the new market can be delivered in two years. The markets are a thriving community of 2,000 staff with truckloads of deliveries coming in, and vans shipping goods to small businesses and markets throughout the Midlands.

Sub-wholesalers in towns like Cheltenham, Leicester, Gloucester, Swindon and Wales stock up in Birmingham every day, and hundreds of corner shop keepers, take aways, restaurants and hotels pick up their fresh meat, poultry, fish, fruit and veg.

Mark Tate, of GP Perry fruit and vegetables and chairman of the trader’s association, said: “We are always busy. The Asian businesses rely on us. We supply the Chinese Quarter, people come from Handsworth for their Caribbean fruit and veg. And then there are the hotels, the caterers. Where will they go?”

The council argues that the market, which opened in 1973 is crumbling and needs to be demolished, but traders claim that despite being almost fully occupied, the decay is a result of decades of under investment.

Zahir Rasul buys stock for Pak Supermarket, which with seven stores in the inner city is Birmingham’s largest independent Asian retailer. He said it spend sabout £3 million a year at the markets.

He said: “The wholesale market drives our business and has done for 30 years, it is the focal point for at least 40 per cent of our stock. The fresh fruit and veg is the first thing people see when they come into our shops. It would add massively to our costs to have different markets or to go to different cities.”

Birmingham’s outdoor Bull Ring market traders have now joined the campaign to protect their neighbour, fearing that if the wholesale market dwindles, they will be next with developers eyeing up their pitches for further expansion of the Bullring shopping centre.

Outdoor traders representative Bernice Ellis said: “This is the first phase of the social cleansing of the city centre,”

A city council spokesman insisted that it would help the traders relocate within the city: “We will not cut them loose, they will stay until a new location is found. 2013 is an indicative date by which time we believe we can find a new location. We are offering assistance, we have a dedicated property manager pro-actively looking for sites.”