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…but retail sector must cover feed cost increases

Published on 13 July, 2007, Last updated at 13:00 GMT
 
13/07/2007

WHILE the prospect of firmer cereals prices is good news for those growers whose crops have survived the rain, the livestock sector is looking to an expensive winter and the possibility of beef production costs increasing by 40-50p/kg.

Consequently, farmers and feed compounders want to see the processing and retail sectors respond by paying more for beef. The NFU predicts soaring cereal and protein prices could add up to £160 per head to the cost of production for some beef farmers, compared with two years ago.

NFU chief livestock advisor Peter King estimates the impact this is having on feed prices could, in turn, put an extra 40-50p/kg on to the cost of producing cattle later this year, compared with 2005.

“The current prices that farmers are being paid is nothing short of robbery and we need to see inflation at farm gate level,” Mr King said.

Beef farmers were ‘not asking for the world, but just a fair share of the margin from the supply chain.


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Paul Rooke, joint head of policy at the Agricultural Industries Confederation, which represents the feed industry, said with feed costs representing only a small proportion of the retail price, a minor increase can go a very long way. Compounders had been ‘on their knees’ for the past two years, and had absorbed much of the increase in ingredients costs, but inevitably some was passed on to farmers.

However, one retailer claims it will not hit farmers suffering rising feed costs with a squeeze on farm prices to fund the current price war being waged between the supermarkets.

Speaking on Farming Today, Asda’s category director for meat, Alex Brown, said:  “We never look to squeeze farmers, we always go with the market price.  If feed prices go up, the farmers need to recover those costs, the market price will rise and we will pay that market price.”  Asda, he claimed, had a policy of paying market price rather than seeking to drive prices down through restrictive contracts and farm gate negotiations. 

The Devon poultry company Lloyd Maunder’s 157 chicken growers produce 500,000 birds a week, for sale in supermarkets all over the UK. Currently, the company is paying around 40 per cent more for wheat than this time last year and says it needs to recoup this increase from the retail end with a  price rise of about 13p/kg, putting around 20p on the price of a 1.5kg whole chicken.


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