Up to 400 jobs are at risk at a 2 Sisters Food Group factory in South Wales as a result of turbulence in the red meat sector.

The meat processing giant said the packing operation at a site run by its St Merryn Foods subsidiary in Merthyr Tydfil was “no longer sustainable” after a strategic review of the facility. It has launched a staff consultation into the future of the division, which includes the packing of steaks and chops for retail customers.

Falling red meat volumes, higher input costs and difficulties encountered in a “fiercely competitive retail landscape” were the main factors cited by St Merryn Foods, acquired by 2 Sisters in 2013.

It is proposing the shifting of packing operations to St Merryn’s other two sites in Cornwall from January 2017 in a move that could make about a third of the workforce in the South Wales factory redundant.

“We do not take the decision to launch this review lightly, but it is the only way our business can survive and prosper for the longer term,” said St Merryn Foods in a statement.

“This decision does not impact our beef and lamb slaughter and cutting operations and these will continue to operate as usual at Merthyr Tydfil. The site will continue to employ up to 700 colleagues.”

The Farmers’ Union of Wales called the redundancy plans a “major blow for Wales”.

“The agricultural supply chain employs scores of thousands of people in Wales’ rural and urban areas, and these proposals will come as a major blow to the families affected and the community as a whole,” said Brian Bowen, South Wales representative on the FUW’s finance and organisation committee.

Staff have been notified of the proposal, and the company is currently in talks with the Welsh government, Jobcentre Plus and Staffline.