Welsh prices must rise
Welsh lamb farmers need to be paid another 71p/kg if they are to achieve long-term sustainability in the face of current challenges, HCC's chairman Rees Roberts claimed.
Speaking to stakeholders at the Royal Welsh Show last week, Roberts said farmgate prices needed to rise significantly if the industry was to survive in the face of rising costs and falling prices. He said: "HCC's latest figures for lamb costs of production, when tied to current farmgate prices, show that farmers are currently falling 71p/kg short of reaching a sustainable, commercial return.
"Just to break even, the average farmer needs to receive an additional 30p/kg. The message from our latest research is: farmgate price constriction is a serious threat to the industry's long-term sustainability."
HCC used the Royal Welsh Show to meet with supermarkets to share its research details and discuss ways to maintain Welsh lamb sales and prices through the winter months. It also brokered a series of meetings between farmers and retailers to discuss recent issues surrounding lamb imports.
Roberts said: "It is particularly unsettling to see that, while farmgate prices in Wales are squeezed, imports have increased at key times of the year when supply of fresh Welsh lamb is available. The supermarket chains are vital to our production industry and we will talk positively around how we can work towards developing a supply chain that acts with the strongest commercial focus - but also honours its social and consumer obligations," he added.
Roberts reported that lamb consumption in Wales remained robust. Consumer spending on leg roasting joints and chops had increased by around one-fifth in just 12 months. "In Wales, 8,500t of lamb were sold - a rise of almost 12% in a year, compared with 7.5% in the UK as a whole. Expenditure was 13.4% higher, almost £47m more and nearly double the UK-wide increase," he said.
He added the research showed how much the farmers' margins had been squeezed in recent years; in 1995, farmers received 57% of the retail price per kg, while in 2006 that had fallen to 47% and in 2007 is likely to drop to 45%.
More and more farmers were becoming competitive, he said. "We are bridging the production gap between subsidy and profitability; we are raising the profile of our brands; we are selling more of our quality products; we are adding value to those products and we are achieving better retail price for those products. But despite these gains, farmgate prices are edging downwards and, as a result, farmers are being forced to keep running to stand still."
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