RISING food costs have attracted much publicity in recent weeks, the latest claim being that food inflation is running at 19 per cent.
That may be true but farmers are not receiving enough to cover vastly increased costs, according to Charles Bourns, the chairman of the poultry board of the NFU of England and Wales.
He says production costs in the chicken meat sector have risen
by nearly 25 per cent, which equates to 14p per kg liveweight, in the past year. A survey carried out by the NFU revealed that, on average, producers are making a loss of 2.7 per cent on every bird they produce when all costs are included.
Bourns, speaking at the annual Pig and Poultry Fair at Stoneleigh Park in Warwickshire, added: "A recent British Marketing Survey showed consumers are still actively seeking to buy assured British chicken but we need to ensure enough money is passed back down the supply chain to make businesses economically viable in the longer term.
"Producers cannot continue to absorb the cost of rising input prices without receiving a fairer return."
Bourns said typical feed costs for poultry at £221 per tonne are 42 per cent higher than a year ago. Costs of production are estimated at 69.85p per kg, but producers are only receiving on average 68.08p per kg at the farm gate.
Much the same is happening in the dairy sector despite the fact that milk prices are significantly higher than last spring.
However, Robert Wiseman Dairies yesterday confirmed it was to increase its ex-farm price of milk by 0.5p per litre, as from 1 May.
This will take the price to 26.2p per litre and means members of the Wiseman supply group are now receiving 40 per cent more for their milk than they were in February 2007.
The move comes despite the fact that the company is facing significant cost increases for oil and plastics and a marked fall in the value of bulk cream.
Pete Nicholson, milk procurement director at Wiseman, said: "The whole supply chain is under pressure from rising costs and we have the added complication of the cream market. Ordinarily, this would have triggered an automatic reduction in the price, but with farm input costs continuing to rise and UK milk supply tightening, we want to send a clear signal to our farmer members.
"We believe it is necessary to move the milk price forward in order to ensure that our price remains competitive and instil confidence in our supply base."
It remains to be seen how other milk buyers will react to the Wiseman announcement. The general view is that they will have to follow suit to maintain supplies, especially with farmers being aware of the fact that they are in a sellers' market. The old days when a producer would sell his milk to the same buyer for years without considering alternative outlets are long gone.
