With lamb prices being squeezed in spite of an increase in retail prices,
NFU Scotland is telling the supply chain that if it wants quality, it must
pay for it. NFUS is also urging sheep producers to be resolute in their demands
for a fair price.
The latest average deadweight price for lamb was 228p/kg compared to 246p/kg
for the same week last year. This seven per cent drop in farmgate prices
contrasts with a 10 per cent rise in retail prices between 2004 and 2005
suggesting that retailer profits are increasing on the back of a farmgate
Whilst emphasising the importance of farmers meeting market specification
and striving for quality, NFUS is stressing that both short-term and long-term
action is required to secure a viable return for sheep producers and, in
return, to secure the environmental, social and economic benefits of the
hill sheep industry.
In the short-term, NFUS believes that last year’s sheep price must
be used both by farmers, processors and retailers as a benchmark. To get
over short-term difficulties, it is vital prices rise to at least this level.
That involves producers holding out for a decent price and the market delivering
it. In the longer-term, price must rise to a more sustainable level, which
covers costs of production and secures a viable future for the industry.
Chairman of the NFUS Livestock Committee Nigel Miller said:
“The price plunge of late is sending a brutal signal to sheep producers
that the major buyers do not value domestic production after the New Year.
As buyers seek to grasp market advantage, downward pressure has pushed prices
way below the same period last year and, critically, way below the cost of
“The impact of that message not only has immediate financial implications
for the sheep industry, but has serious implications for the future of hill
sheep farms, which provide the foundation of economic activity in many areas
of the country.
“Of course we have to make sure we are producing quality lamb to the
right specification. But even when doing that, our returns are being hammered.
“The industry has to stand firm and demand a fair price - and
retailers and processors have to ensure they are delivering at least last
year’s lamb price to get over this short-term nightmare. Longer-term
we have to develop a sustainable supply chain. We are writing to all the
major retailers to engage them in developing this chain - we won’t
sit back and watch retailer margins increase while farmgate returns head
in the opposite direction. Given their oft-stated commitment to quality-assured
food, with high animal welfare and environmental standards, it is in their
interests to develop a year-round supply chain which doesn’t just reward
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