BEEF INDUSTRY representatives have told the Office of Fair Trading that unless it allows supermarkets to raise beef prices in unison farmers will struggle to survive.
The National Beef Association has told the OFT that significant price rises must be introduced after Jan 1, 2005.
This is because farmers will no longer be able to underwrite retail prices after coupled subsidy payments are removed.
“If the OFT is committed to maintaining consumer choice it will have to take our message seriously,” said NBA chairman, Robert Robinson.
“It is impossible for UK farmers to bridge the gap between 300p/kg production costs and an average income of just 180p/kg, without the help of a big jump in the value of finished cattle.”
According to the NBA most multiples appreciate that it is impossible for farmers to continue to sell beef for less than the cost of production.
“But they do not know how to get themselves off the discount spike on which they have impaled themselves,” said Mr Robinson.
“This is because if a company takes individual action and lifts prices on its own it will be shot down by its competitors and if each supermarket raised its prices at the same time
they would all be clobbered by the OFT.”
Mr Robinson said it was time for the OFT to accept that decoupling made it impossible for beef farmers to continue to subsidise the cost of beef put before consumers.
“And that if producers cannot receive a fair price for their product, the UK industry will lose so many beef cattle that its supply security will be endangered.”