AN INCREASE in drought across the state and a record price paid for lamb this week has fuelled concern that some food prices could rise.Rainfall across most of the state over the past six months has helped farmers, and conditions for pastures and winter crops are the best in two decades.However, drought figures to be released today reveal almost half the state remains on the brink of drought, with the area already in drought creeping up by 4.5 per cent last month to 13.9 per cent.Even before winter, the price of lamb had already eclipsed the highs seen last July, when prices usually rise. Beef prices have increased over the past few months and are also tipped to rise due to winter shortages.The Minister for Primary Industries, Steve Whan, said lamb was already too expensive for many families to buy.”This week a new lamb price record was set for NSW, with a pen of lambs at Forbes selling for $193 per head. There’s no doubt this spike in price is due to limited supply,” he said.”This is good news for our farmers who have been battling drought, but in the end the cost will be passed on to consumers at their butcher’s shop.”The sheepmeat industry leader for Industry and Investment NSW, Ashley White said the drought increased production costs. ”The prices of lamb have been $5.50 to $6 a kilo, carcass weight – prices used to be $3 to $3.50,” he said.”It was 1916 since our sheep numbers were this low and that’s been mainly drought-related so people have been cutting back their breeding ewe numbers, but on top of that export and domestic demand has been good and stayed the same.”Mr White said farmers were faced with a catch-22 decision: whether to sell female lambs and get high prices or keep them as breeders for the coming seasons.”Financially they have done it really hard ever since 2002, but this season is shaping up better.”Crop planting began after the rains in May. Most of the state’s canola crop and 70 per cent of the wheat crop are now planted, but stock farmers still had concerns, Mr Whan said.”Stock water remains an issue for many farmers, particularly in southern regions where there is still great variability in both water supplies and pasture condition,” he said. “Pastures remain poor in most southern areas and the northern tablelands and growth is expected to stall now that cooler conditions have set in.”The president of the NSW Farmers Association, Charlie Armstrong, said that while 87 per cent of the state was not in drought, farmers had to contend with locust plagues and small returns on crops already planted.”Certainly over a period of time and if we divert into a greater proportion of drought that does mean food prices go up,” he said.”We’re being cautious because the figure for marginal [drought] was about 50 per cent and that says you’re on a knife-edge. It doesn’t take very much lack of rain to tip people back into drought.”