Farmers feel they are being squeezed in terms of profits while they have to comply with increasingly tight and costly welfare and environmental production codes.
"Supermarkets account for 80 per cent of organic sales in the UK," explained Michael Green, Soil Association policy officer.
"This is good as it's a mainstream outlet for farmers to reach consumers, but obviously this affords supermarkets a big impact on the whole sector."
"Farmers have told us they find it increasingly hard to supply supermarkets and remain financially viable," he added.
Green said that the top eight UK supermarkets source more than 75 per cent of their organic apples from overseas and just 55 per cent of organic onions sold on their shelves are British. This sourcing policy is exacerbating the problem for local farmers according to a recent Soil Association survey.
And government organic subsidies have now ceased, leaving farmers to struggle with low returns, smaller yields and high supermarket prices, as the top five food retailers seek out low-cost foreign organic alternatives.
The premium consumer cost for organic produce is still being maintained but this high profit margin is not passed onto suppliers.
"Profitability of farming has decreased in the past 20 years generally, but organic farmers feel it much more because they need to get a premium for their produce to cover increased costs," said Amarjit Sahota, director of UK-based organic food research analysts, Organic Monitor.
"The UK retail market is very competitive, with price wars, so supermarkets squeeze suppliers who squeeze producers."
Waitrose, Marks and Spencers and Sainsburys all force British organic foods to appeal to consumers' food provenance concerns, but the top two retailers - Tesco and Asda - compete much more on price, he explained.
In 2003-4, 56 per cent of all organic food by value was imported which was down on the 2001-2 figure of 65 per cent but unchanged on the 2002-3 level.
These statistics, and the movement away from Scottish organic farming, puts pressure on government targets which aim to encourage an increase in British organic sourcing to 70 per cent by 2010, as laid out in their Organic Action Plan.
Scottish Executive subsidies, since 2000, were supposed to kick start a Scottish organic revolution, enabling the fledgling sector to increase its market share.
Since 2001 more than £21.8 million has gone to farmers to convert to organic production, while £7 million in grants has been awarded to organic producers to support infrastructure investments of around £34 million.
According to Organic Monitor annual retail sales of organic foodstuffs have soared tenfold to top £1.25 billion in UK alone in the past decade, which initially encouraged more growers and food makers to get involved. But this is set to change as supermarket pressure limits British supply.