The price of meat will have to rise to protect the health of the livestock industry, which is reeling from the latest outbreak of foot-and-mouth and the wettest summer on record, according to a study published today.
The EU export ban on British meat that was lifted over the weekend cost farmers £1.8m a day since it was imposed at the start of the month. Farmers are also suffering from the rising costs of wheat and soft commodities. Some producers are facing almost 100 per cent price rises in feed costs, according to the Deloitte consultancy.
The National Farmers' Union (NFU) said many farmers were reducing their stock or considering quitting livestock farming.
Richard Crane, food and agriculture partner at Deloitte, said: "UK shoppers will have to pay more for their meat. Increased prices will allow farmers to continue to meet the increasing demand for local, high-quality meat. Without it, the opportunity to enjoy home-grown quality produce and British meat could become a rarity on supermarket shelves."
Peter King, the NFU's chief livestock adviser, said that, following the dismantling of the Common Agricultural Policy, which guaranteed a minimum price to producers, British livestock farmers have been struggling. Farmers are paid 200p per kilogram for cattle but this is 15-20 per cent less than the cost it takes to produce it, he said. The doubling of wheat prices has added an extra 45-50p to the cost of a kilogram, which farmers are unable to get back.
"It is just at the point where consumers are demanding more local and more home-grown products that British farmers are most under threat," said Mr King. " Everybody in the supply chain has a responsibility to recognise that farmers are producing meat well below the cost of production."
He said that, over the past two years, cattle stock had reduced by 7 per cent and this looked set to continue.
Mr Crane said vaccinations of animals are likely to be introduced to ensure no further outbreaks occur, which would be an extra burden on farmers. Furthermore foreign markets could still close their doors to UK meat.
"The export of animal by-products, for example, the sub-prime cuts which are exported to maximise returns, would not be available," he said. "The upshot is reduced returns to the farmers and the processors which could hurt the UK's £493m-a-year meat export industry."
In February, following the outbreak of bird flu, Sainsbury's and Morrisons reported a 10 per cent week-on-week drop across all fresh and frozen poultry products and Sainsbury's said sales of its own-brand poultry products were down by 5 per cent.
The EU ban was imposed after foot-and-mouth was first confirmed at a farm near Guildford in Surrey on 3 August.