Farming unions have said sheep farmers in the UK are being "hit from all sides" by a collapse in the farmgate price of lamb and soaring farm costs.

NFU said on Monday that "Tensions are high" among its livestock members, as a gulf has been identified between farmgate prices and retail price for lamb in supermarkets. While farmgate prices have dropped by nearly a quarter and wholesale prices for UK legs of lamb are down 17 per cent, prices in the shops for UK product have only fallen by two per cent, according to figures from the end of last year.

And the issue isn't restricted to UK lamb. Figures show the wholesale price of New Zealand lamb has dropped 23 per cent (year on year), and yet the retail price for consumers has only come down 12 per cent in the same period.

With the latest figures for November showing the highest level of imports since 2006, the NFU will this week be meeting with officials from Beef and Lamb New Zealand, which is the largest sheepmeat importing country to the UK, to discuss global market conditions and seek to find common ground.

NFU livestock board chairman Charles Sercombe said on Monday that the farmgate price for UK lamb risks becoming "unviable" in a period where sheep farmers have seen their costs rising. He also expressed concern that retail prices have not been affected by anywhere near the same amount.

Mr Secombe said, "Many of our sheep farmers, particularly those in the uplands, have been experiencing a major downturn in lamb prices which I fear will drive confidence out of the industry. Consumers also want to see competitively priced UK product on the supermarket shelves, but the present situation is not sustainable. We have recently written to all major retailers urging them to show long term commitment to our livestock producers; ccurrently farmers are suffering, and consumers aren’t benefitting, so just who is reaping the rewards?"