Exiting The Milk Market As Retailers Slash Prices
UK - More dairy farmers have left the industry in the first half of 2010 than in the whole of 2009 while the nation’s major retailers have embarked on a renewed milk price war as they try to compete with each other and the growing number of discount supermarkets.
11 August 2010
2 minute read
In Scotland, the Scottish Dairy Cattle Association (SCDA) has reported that thirty-eight farmers had been forced to sell up in the first half of 2010, compared to 41 during the whole of 2009.
Supermarkets have spent the last two weeks cutting the price of their low-fat varieties, while ASDA, significantly, have reduced the price of their main milk product. Milk sales are growing as overall sales of pasteurised fresh milk have been increasing by 0.8% each year since 2006. During the same period the discount retailers’ market share has roughly doubled, which appears to have sparked the reduction in milk prices now being seen in major UK supermarkets.
Allan Bowie, NFU Scotland's Vice President said: “The statistics speak for themselves; by a long shot the number one reason Scottish dairy farmers continue to leave the industry is because it is financially unsustainable. When will our nation’s supermarkets learn that if they continue to pay their dairy producers less than they need to survive that they threaten the future supply of fresh Scottish milk?
The fact that milk sales, and therefore milk consumption has grown each year since 2006 is a clear indication that fresh milk sales could be a real success story, but only if there is an industry there to provide the milk in the future.
“Retailers’ profits continue to be strong, but competition between the major supermarkets and their discount rivals, while it may appear in the short term to be in their customers’ interest, is undermining the nation’s ability to produce one of its staple foodstuffs.
“We have heard numerous statements from the retailers of their intentions to work with the industry for the good of all concerned, but price turf wars such as this show their priorities lie elsewhere. NFU Scotland shall be contacting all the retailers concerned to ask how this latest spate of price reductions ties in with their promises to work with producers.
“We shall also highlight the issue to the UK government as it prepares its new legislation in order to set up the Groceries Code Adjudicator and the EU’s High Level Working Group on dairy, which is examining the relationship between and profitability patterns of dairy producers and retailers.”
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