In a letter to MTJ, Alistair Mackintosh, livestock chairman with the National Farmers' Union (NFU), said the present prices were "a step in the right direction" and that they needed "to see these prices sustained in order to give confidence to producers to invest in future production".
Mackintosh pointed to the fact the NFU had long highlighted the dangers of price volatility and argued the need for sustainability, coupled with the fact farmers had for years "suffered from unprofitability, producing lambs at below costs of production".
However, the comments have prompted concern from the rest of the supply chain. Tom Harvey, beef and lamb buyer with Sainsbury's, said: “We have to be realistic about the situation and farmers would be wise to consider the end-consumer.”
Harvey added that the economic situation was not encouraging consumers to splash out: “Lamb is already an expensive item for most consumers and that is why consumption is lower than beef, pork or chicken, which are all able to meet the same basic need of providing a tasty and nourishing protein source at significantly less cost than lamb.
“High prices when consumers are still carefully watching what they spend will only lead to one thing even lower consumption of lamb, which in turn will reduce demand and mean we either see a drop in the price or not have the need for quite so many lamb farmers.”
Philip Hambling, agriculture manager with Randall Parker Foods, said: "Seeing confidence come back into lamb production is really encouraging for anyone in the lamb industry.
“However, the average UK consumer might not agree that lamb is good value compared to other proteins. Consumption is being eroded in the UK and across the EU and this is clearly price-driven.
“The trick the industry needs to pull is maintaining profitability while making lamb more competitive at the point of sale. This will only happen with a tighter, more collaborative supply chain relationship, but it is critically important for the future of lamb."
Stephen Rossides, director of the British Meat Processors' Association, said: "It is important that the market delivers realistic returns to both producers and processors. It is important for processors to secure a reasonable margin at whatever the relative level of producer and retail prices.
“For many months now, they have been squeezed between high livestock prices and retail prices held down by supermarkets in the face of the recession and the financial pressures on consumers. Long-term, this is not a sustainable situation.”
Harvey added: “The debate on price has got to stop. Price is not an issue, margin is. The price is totally irrelevant if there is a margin that is fair and sustainable for all and this should be our goal.”