The red meat industry in Northern Ireland is losing more than £200m per year, according to a new report for the Red Meat Task Force.

Retailers and processors in the province make an annual profit of £20m each from sales of red meat, but producers are racking up losses of some £260m a year, according to report author McKinsey, which said farmers were being forced to plug the profitability gap with EU subsidies.

Farmers groups, who said the figures confirmed what they already knew, called on the retail and processing sectors to raise meat prices immediately. "It is clear that if there is not a substantial improvement in the market price then farmers should not continue," said Kenneth Sharkey, president of the Ulster Farmers Union.

The Task Force said suckler beef producers needed to be paid £3.20/kg to be profitable, while hill sheep producers needed £3.35/kg. Current market prices are closer to £2/kg.

Northern Irish meat processors claimed it was the first time "independent" figures on profitability had been published and said they would support justified price rises.

"This report will be immensely valuable to processors in approaching their customer base in an effort to obtain a more realistic price that can be passed on to producers," said president of the Northern Irish Meat Exporters' Association Campbell Tweedie.

"Processors will work with the broad industry interests to implement the recommendations."

The Task Force will try to build viable supply chains with the processing and retailing sector, but admitted failure was a real possibility. Unless price rises were forthcoming, it would advise farmers to quit production and help the sector wind down.

Some 80% of the province's 20,000 beef producers have fewer than 30 head of cattle, making it "very difficult" to cut costs further or make economies of scale.