Livestock farmers need an urgent lift in the prices they are
paid if supermarkets are to have continued supplies of local
food, according to NFU Scotland which is in urgent talks with
the major retailers.
The price of grain for animal feed has doubled over the last year
and these spiralling costs have driven livestock farmers into a
loss-making situation (see figures in Notes to Editors). The crisis
is particularly acute in the pigs and poultry industry with farmers
facing a disastrous situation in the coming weeks in the absence
of significant rises in the farmgate price.
NFUS has emphasised the global factors that are driving this increase
in food production costs. These include an expanding world population
and an increase in affluence within the largest countries like China
and India - this is translating into improved diets and increased consumption
of products like meat and milk. On top of this, flooding and droughts
- a consequence of climate change – together with an increase in
crops being grown for biofuels are all reducing the land available to
produce food on.
NFUS President Jim McLaren said:
“Is it not an exaggeration to say the Scottish livestock industry
is facing a meltdown unless the spiralling cost of rearing and taking
care of livestock is reflected in the prices farmers are paid. Supermarkets
must understand that the same factors which have driven dairy farmers
out of business and landed the country with a milk shortage, are now
hitting the whole livestock sector.
“The pigs and poultry sectors are staring into an abyss at present.
Pig farmers are losing money on every pig they sell and the story is
no better for egg and chicken producers.
“The fact is that global shortages are at last driving cereal
prices back to a sustainable level. However for livestock producers who
require grain for feed, the effect on production costs is horrific. The
price they were receiving was already woeful. This unprecedented rise
in costs has led farmers to question their future and I believe it could
spell the end of guaranteed supplies of Scottish meat and meat products
on supermarket shelves. That is obviously not what farmers want and,
crucially, it is not what consumers want. Supermarkets must now stand
up to their warm words of commitment to local food production. They must
also meet their responsibility to their customers by securing future
supplies with higher prices for suppliers.
“Substantial rises in the prices farmers receive do not have to
mean big hikes at the tills. Food sold by retailers incorporates a significant
mark-up and, for example, a 25% increase in the price a farmer receive
for pigs - which would just cover rising costs - would only equate to
about four pence on a packet of ham or 10 pence on a packet of bacon.
However, it is for retailers to decide whether they want to charge their
customers more or absorb these costs within their own significant margins.” More/…
- In August 2006, wheat for animal feed cost approximately £80
per tonne. Today the price is around £170 per tonne.
- Unless there
is a farmgate price increase, pig farmers are facing a loss of
and £13 on every pig sold.
- The cost of producing a dozen eggs
has gone up 12p per dozen
Even if the entire price rise farmers needed was passed on to consumers,
the impact would be relatively small – and that is presuming supermarkets
won’t cut their profit margin and will instead ask their customers
to pay. For example:
- A 30p/kg rise for pig farmers – to cover extra
feed costs – would represent a rise of only 13p on a typical
pack of pork steaks or sausages, 10 pence on a pack of bacon
and 4 pence on a pack of sliced ham.
- The doubling of wheat prices only
adds 8 pence to the price of a loaf (every £10 per tonne increase
in wheat prices is equivalent to one pence on the retail price
- If malting barley doubled in price, it would add around
3 pence to a bottle of whisky.
- In the last year of its life,
a prime suckler beef animal will eat around one tonne of barley.
The cost of this has increased from £90/t
to £170/t. Suckler beef producers need an extra 25p per kilo
deadweight, just to cover that individual cost.
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