Fifty jobs are under threat in mid Wales at a company seen as one of the pioneers of the organic food movement.
Organic Farm Foods was established in Lampeter 20 years ago
Organic Farm Foods in Lampeter, which set up in the town in 1985, said escalating transport costs were partly to blame.
Workers are expected to hear in the coming weeks whether they will lose their jobs.
In Ceredigion, the company packages organic vegetables for Tesco, Waitrose and Sainsbury's.
Vegetables such as cabbage, broccoli and swede are dealt with in Lampeter. The firm also has a fruit and salad division in Worcestershire.
The packing facility at Lampeter will be shut
It claims to be the UK's largest pre-packer, importer and distributor of organic fresh fruit, salads and vegetables.
Packaging manager in Lampeter, Mike Groden, said: "About 50 jobs are under threat. "We don't have a date for closure, but we expect to know in about six weeks.
"The company is trying to save costs and wants to transfer vegetable packaging to its other plant in Leominster."
As well as in Leominster in Herefordshire, Organic Farm Foods also has a sister branch in Honeybourne in Worcestershire.
"The logistics of getting food to and from Lampeter is seen as a problem and transport costs are high," added Mr Groden.
Course of action
"Management and packaging staff have been offered relocation posts, but many see this as unrealistic as Leominster is a long drive away."
Company chief executive Jack Slatter said during the last 20 years the company had become a "major supplier" of organic produce in the UK.
"We are seen as one of the pioneers of the organic food movement in the UK," he said.
In a statement, Organic Farm Foods said: "Projected volumes to 2008 indicate that we do not require to operate two facilities for vegetable packing.
"We have considered the attributes and costs of closing either Lampeter or Leominster, and the most cost-effective course of action would be to close the packing facility at Lampeter."
Organic Farm Foods was established by Peter Seggar and Patrick Holden, who is now a director with the Soil Association.