The selling off of Vion’s UK operations has hit a major stumbling block, with its Welsh lamb processing site now facing closure because Asda decided to terminate its contract following a strategic review.

Welsh Country Foods, on the Island of Anglesey, today kicked off a 90-day consultation with unions and the 350 staff at the site.

The plant is of great importance to the Welsh lamb industry. It processes about 640,000 lambs a year – accounting for about 16% of all Welsh lambs – and is the only remaining major abattoir in North Wales.

Jose Peralta, MD of Vion UK’s red meat business, said Vion recognised the impact closing WCC would have on Welsh farming, adding Vion was still talking to Asda to see if it could be persuaded to change its mind, and would explore all options for saving the site. But he warned: “If the consultation exercise does not reveal a viable way forward for this plant, regrettably we will have no other option but to close the site.”

Asda said it had decided to serve notice on its relationship with WCC following a strategic review of its lamb business. It would not reveal who would take over the WCC contract. “The decision was not taken lightly; however, we feel it is an opportunity to review our lamb sourcing to meet the changing needs of our customers,” a spokeswoman added. “We have built a strong relationship with Welsh lamb farmers, and we remain committed to sourcing lamb from the country.”

Dai Davies, chairman of Welsh meat promotion body HCC, said closing WCC would be a hammer blow for the Welsh food and farming industry. “We will not only lose hundreds of jobs, but we will also lose the facilities provided by the plant itself – which include slaughtering, boning and retail packaging, which all add value to the final product. Closure will cause long-term damage to the economy of Wales.”

Vion is in the process of pulling out of the UK and selling all its sites. It is believed there had been good interest from potential buyers for WCC, but a sale will be much less likely now the plant has lost its key customer.

One source from the Welsh lamb industry suggested Asda could be hit by farmer protests in the near future. “Welsh farmers have a reputation for being quick to protest, and they are very angry with Asda’s decision. There’s already talk that Asda stores in Wales will be targeted.”