The latest figures published on the Defra website show that from 1988 to 2007 the proportion of the retail price paid to primary producers has fallen by as much as 37 per cent.

As a result last year just 10 per cent of the price of a white sliced loaf went to arable farmers compared to 23 per cent in 1988.

Beef farmers received 45 per cent of the retail price compared to 67 per cent in 1988 and sheep farmers got 41 per cent compared to 65 per cent.

Pig farmers' prices have been squeezed the most with their share of the retail price falling from 57 per cent to just 36 per cent and dairy farmers have also seen their share drop from 38 per cent to 35 per cent.

Commenting at the Yorkshire Show, the NFU's Russell Toothill said the impact of such a prolonged price squeeze – which has hit Yorkshire's livestock, dairy and cereals sector the hardest – had been a lack of investment in farm businesses and low incomes for farmers and their families.

"Over recent months we have seen an improvement in farmgate prices and this has given farmers some hope for the future, but like everyone else at the moment we are also facing huge hikes in our costs, with energy bills up 80 to 90 per cent, fertiliser up 120 per cent and feed prices up nearly 40 per cent.

"The result is that any price increases have already been wiped out so there is categorically no scope for retailers to pass any price cuts back down the line.

"If they want to sell products for less, cuts will have to come from their own profit margin or from elsewhere within the supply chain."
Looking back over the 20-year period up to last year, food retail prices rose by 57 per cent and the cost of living went up by more than 90 per cent.

In contrast farmgate prices rose by just 17 per cent. While the Common Agricultural Policy had an important part to play in keeping farmgate prices low, the situation is now dramatically different with support payments no longer linked to production and reducing year on year. This means that farmers are being told quite rightly that they must get their living from the marketplace.

"This is something the industry is struggling to achieve and as a result we are seeing the traditional sheep flocks in particular plummeting in Yorkshire by more than 17 per cent in the six years from 2000 to 2006," added Russell.
"Supermarkets have responded to fears that an ongoing lack of profitability, particularly for livestock and dairy farmers, could threaten future supplies of British produce. Alongside some improvement in the farmgate price we have also seen other initiatives including the development of dedicated supply chains and longer term contracts.
"It would indeed be a tragedy if this work was jeopardised by a battle to maintain retail market share.

"Farmers want to work with the major retailers.

"After all, they are our largest customer, but for once they must realise that the cost of a price war cannot be borne by their suppliers it's something they will have to take responsibility for."