The future of Malton Bacon Factory was under a cloud today after owners Malton Foods reported losses of £5.4 million.

The loss, for the six-month period up to September 30, compares to a profit of £1.3 million for the same period in 1999.

Parent company Uniq, formerly known as Unigate, decided to close a Middlesbrough plant owned by Malton Foods last week.

Speculation has been rife that the Malton factory - where 2,500 people work, making it Ryedale's biggest employer - could be sold or closed in the wake of the continuing crisis in the UK pig meat production industry.

While pig meat now sells at around 102p per kilo, continental farmers can sell their meat at around 80p a kilo, leaving British producers struggling to compete.

A Malton Bacon Factory spokesman said today there were a variety of factors behind the big loss, price differentials being one of them.

He said: "It is still a very difficult time for the pig industry, and I think it could continue for some time. There are fewer pigs around, farmers have gone out of business and the situation was compounded by swine fever. It is hard to say how long this will go on for."

The spokesman played down talk of closure.

He said the fact that redundant workers from Middlesbrough were being offered work in Malton was evidence of the factory's continuation.

"I cannot predict what measures may or may not be taken here. Certain measures have already been taken as part of a restructuring programme - the closure of the Middlesbrough plant is an example of that - but I can't speculate on what may or may not happen here."

The Mayor of Norton, Margaret Taylor, said it would be "shattering" for the town if the factory had to close.

She said: "Hopefully it won't come to closure. But I know there are a lot of problems with the pig industry, with prices on imports and pork.

"It is our biggest employer. It is not long since we lost the clothing factory here and so many families depend on the place.

"We all thought it was quite safe - this is the last thing we need here, as the floods have been bad enough."

Ryedale MP John Greenway said: "This just shows the Government needs to give more support to pig farmers and the rural economy in general."