The price of meat may soon increase as production costs mount and demand outstrips supply, a British analyst said Tuesday.

'We have been producing livestock at below the cost of production for some time now and we cannot continue to do that.'—Alistair McIntosh, farmer

Richard Crane, a London-based analyst with the consulting firm Deloitte, said beef, pork and poultry producers are struggling with rising feed costs. Wheat prices reached an unprecedented peak of $7.44 U.S. a bushel on the Chicago Board of Trade market last week after climbing steadily for months.

Poor weather in wheat-producing regions of Canada and Europe has contributed to the price increase. In addition, more wheat and oilseed crops are being used to produce biofuels.

"Supply has fallen and at the same time demand has risen," Crane said. "We have obviously more people in the world eating more meat which takes up more of the grain. Interestingly in the last year we've really seen the growth of biofuels — more grain that's being grown is going into the fuel market.

"I think we're inevitably going to see meat price rise, because this pressure is going to come across the world. All meat producers are going to face higher input costs."

Alistair McIntosh, a U.K. farmer, says a rise in prices at the supermarket is inevitable. He says farmers are nearing their breaking point.

"We have been producing livestock at below the cost of production for some time now and we cannot continue to do that. It's important that we do see some rises in the final product," he said.

Rising grain costs is helping to drive up the price of beef, according to a UK research report.
(CBC)

Crane said consumers can expect to see an inflation in food prices comparable to the gradual but steady rise in oil prices.

"At the end of the day food prices will have to rise and in different countries they'll rise at different rates. I think it's a little bit like the way oil prices move and that just moved up a significant level over the last two or three years," Crane said.

British farmers vulnerable, Crane warns

British farmers in particular are in need of protection, Crane noted, saying producers may suffer lingering repercussions of the recent foot-and-mouth outbreak. He said homegrown meat may become a rarity in British supermarkets.

The European Union last Thursday relaxed a ban on exports of British livestock, meat and dairy products. About 600 animals were slaughtered after officials confirmed two outbreaks of foot-and-mouth disease at two farms in southeastern England.

Farmers said the temporary trade ban cost them nearly $4.16 million U.S. a day in lost income.