Asda chief executive Andy Bond has told its meat processors they must pass at least some of the higher prices they are now being paid on to farmers.

In a letter to Bpex, Bond told pig farmers that Asda supported the sector and understood the pressure it was under with high feed prices. "I have made it quite clear to all our processor suppliers that I expect to see a significant part of the previously agreed increase in cost price that we pay to our processors passed back up the supply chain to the farm level," Bond wrote.

The move has been interpreted as a clear signal that Asda is poised to pass some of the recent retail price hikes back to pig farmers.

Supermarkets have been accused in the past of raising prices at retail level but not to the benefit of farmers. Retail prices have begun to move upwards in the past two weeks, with loins rising by as much as 9%, or 50p/kg.

Bond's actions were "enormously significant", said Chris Lamb, consumer marketing manager at Bpex. "You can't get any more black and white than Bond's statement," he said. "Asda has realised this is an industry with genuine problems, and that if it wants a continued supply of high-quality, high-welfare British pigmeat then it has to do something about it."

Lamb said the multiples now had no choice but to pass some of the higher retail prices back. "Retailers put up prices in the autumn, but little or nothing came back to the farmers - there's no excuse for not passing price increases back this time," he said.

Asda's move comes against the backdrop of further warnings that pig farmers across the Continent are struggling. While UK producers continue their public awareness campaign, one of Denmark's largest butchers' co-operatives, Danish Crown, announced it would be closing its pig slaughterhouse at Skive and deboning unit at Hurup.

There is expected to be a long-term decline in Danish pig slaughterings and with much Danish meat heading for Britain, commentators say it is a reflection of the instability in the sector.

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