HAM was the first item on the chopping board in a range of Christmas price cuts at supermarket giant Woolworths last week.Woolworths announced it would drop the price of its own-brand Christmas bone leg hams by up to $18 each, the first of 21 items slated for a cost cut in the lead up to the holidays.
The promotion trims the price of the hams to $6.99/kg, a $2/kg reduction.
Head of fresh meat Andrew Goudie said this was the cheapest he'd seen Christmas hams in his 25-year career as a Woolworths butcher.
"Leg hams have increased in popularity in the past three years but they are usually 7.99-8.99/kg,'' he said.
Woolworths spokeswoman Kristen Young assured Weekly Times Now the price cuts would be absorbed by the supermarket, not farmers or processors.
"We sourced these hams through our regular growers and put our own price reduction on them,'' Ms Young said.
But Victorian Farmers Federation pig group president John Bourke said it cost farmers up to $3 a kilo to produce the meat and cost smallgoods processors about $2.60 a kilo to cure a ham on the bone, meaning processors competing with Woolworths would suffer.
"Processors sell the finished hams for around $8 and the Woolworths price is below the cost of production,'' Mr Bourke said.
"What's going to happen is that no one is going to make any money this Christmas.
"Our costs of production have increased by 40 cents a kilo in the past two months because the price of grain has gone up by $100 a tonne.''
Mr Bourke said the real losers would be small processors.
"Woolworths has already got their hams, meaning others will have to heavily discount to below the cost of production to compete,'' he said.
"I was hoping to get an extra 10-20 cents a kilo over Christmas but I don't think I'll even get 5 cents.
"At the end of the day supermarkets can do what they like because they have such high margins and in the harsh reality of business they will always win.''
Mr Bourke said there was a chance the price cuts could clear out hams, causing a price hike in the new year, which would benefit farmers.
Last year Woolworths sold 1800 tonnes of cooked on the bone leg ham, averaging 7-9kg each, and expects this to increase by 25 per cent.
Mr Goudie said in the first week of the sale, compared to last year, sales were up 700 per cent for full leg hams with 1000 per cent kilogram growth.
Half leg ham sales were up 100 per cent on last year with 80 per cent kilogram growth.
Coles spokesman Robert Hadler said there would be no Christmas price war.
"Our focus will be on selling quality farm produce,'' Mr Hadler said.