Scotland's farming union believes the country's food processing industry is being jeopardised by the price war amongst the UK's major supermarkets. NFUS has highlighted the recent Tesco results as evidence that there is sufficient profit within the food industry to ensure farmers and processors, not just supermarkets, can make a living whilst still ensuring the provision of affordable food for consumers.

Grampian Country Food Group has today announced the closure of its plant in Buckie. Whilst it will expand it operations near Edinburgh, there will be a net loss of jobs within the Group. This follows three days on from the announcement of 101 job losses at Kettle Produce in Fife, one of the UK's largest suppliers of vegetables to supermarkets.

NFUS President John Kinnaird said:

"Supermarkets are farming's biggest customers and we must work with them. But we simply cannot work at any price. Tesco's profit announcement and those of the other big supermarkets demonstrate vividly that there is enough profit in selling food in this country to ensure that supermarkets' suppliers are also viable businesses.

"In a matter of days we have seen two of Scotland's leading processors announce job cuts. These are the visible casualties of a fierce price war amongst retailers. Both Kettle Produce and Grampian are successful, efficient businesses that are crucial outlets for farmers. Yet, despite their success, they are not immune to the continued drive to push down prices. This trend simply cannot continue if Scotland is to maintain a viable food processing industry.

"Pig producers in the North East will be extremely concerned at this announcement and will be looking to Grampian for assurances of a continued outlet for their animals.

"To survive in the cut-throat world of the UK food industry, farmers and local suppliers are told to become more efficient. The Scottish pig sector has led the way. It has pioneered farm assurance and enshrined world class standards of production. Yet, not only have these extra production costs not translated into higher prices, but the price has in fact been driven down. The farming and processing sectors also face increasing regulatory costs. The latest road haulage restrictions will increase the cost of getting produce to market, yet the industry is expected to absorb these.

"A trend is developing of increasing supermarket profits at the expense of businesses further down the supply chain. The jobs lost at Grampian and Kettle Produce and the hundreds of farms jeopardised as a result is a political problem that needs to be addressed. I defy anyone to say that the current food retail industry is working to the benefit of consumers. Efficient, Scottish businesses producing high quality food and drink are being driven out of business. The inevitable result is restricted consumer choice and an increasing reliance on imports produced by farming systems of lower standards than those here."