Prices at Lairg in Sutherland fell to about a third of their level three years ago, with one lamb even changing hands for 50p.

Jamie Stone, MSP for Caithness, Sutherland and Easter Ross, wants the parliament's Rural Affairs Committee to collect evidence as farmers continue to suffer from plummeting prices.

BBC Scotland's Forbes McFall reports on the market

His intervention follows a market slump which has seen prices tumble from £40 to £50 per sheep two years ago to just £15 to £20 this week.

Mr Stone is particularly concerned that farmers are being forced out of business when the cost of lamb in the supermarket - at around £5 per pound - remains high.

He said: "I have spoken to my MSP colleague Tavish Scott of Shetland and we are going to put it to the Rural Affairs Committee that they should sit down and take evidence and get all the prices being paid at all the different stages out in the open.

Jamie Stone: "The situation is completely desperate"

"What I can't get my head around is that extra money is coming in from the housewife but it is a much smaller and reducing sum coming to the lamb producer. I think there is something wrong somewhere in the system.

He added: "It is no good people like me wringing our hands - we have got to take action."

A Tesco spokesman denied supermarkets were hiking prices at the checkout. He said only 33% of a sheep was saleable meat once offal and other unusable parts were removed.

Farmers arriving for the one-day market at Lairg in Sutherland were anything but confident that Wednesday would see an upturn in prices.

Prices have fallen to less than £20 per sheep

Stornoway crofter Donald McLellan said: "There is no fun, no jokes or jolly-making anymore. Everybody is very serious looking extremely grim when we meet at sales."

Last week, National Farmers Union leaders in Scotland had a crisis meeting with Scottish Rural Affairs Minister Ross Finnie to impress on him the problems being faced by trade.

Afterwards SNFU President Jim Walker said that efforts had to be made to try to inject confidence now as lamb prices had crashed to a 20-year low.

Mr Finnie said European markets had to be kick-started and he argued that the Scottish Executive was not lacking in support for the industry. He warned it was a complex issue involving different types of market.

Meanwhile, Mr Finnie has described figures showing the first fall in farm borrowing for six years as "helpful".

The figures, from the Scottish Executive's annual survey of bank lending to farmers, recorded an £8m reduction in borrowing.