The company has stared negotiations with the UK's major retailers to increase by six per cent the amount they pay for the Grampain's chicken, pork, beef and lamb products.

Like other companies in the same predicament, Grampian said its energy costs have risen by up to 47 per cent over the past year. With the cost of crude oil reaching almost $60 a barrel margins arebeing whittled away.

Higher gas and electricity charges are making the cost of heating poultry houses unsustainably expensive, the company said. Recent fuel price hikes have affected the transport of livestock and thedistribution of the company's finished products.

Philip Wilkinson, the managing director of Grampian poultry business unit said the company will increase prices by six percent, half of which is due to fuel price increases. Two percentage pointsare attributed to feed price increases and one percentage point to packaging increases.

"Up to a third of any increase achieved from our retail customer base will be passed back to our farmer supply base," Philip stated.

The price rises will affect all of Grampian's customers, including Tesco, Asda, Sainsbury's and Morrisons.