Supermarket Milk Price Rise Welcomed

SCOTLAND - NFU Scotland believes the milk price increase to farmers announced by supermarket giant Tesco is a small step in the right direction but still falls short of raising farmer confidence.
calendar icon 1 October 2008
clock icon 2 minute read

Tesco has written to its suppliers informing them that its base price will increase by 0.75ppl from today (Wednesday, 1 October) through until 31 March 2009, taking its base price to 28.75ppl.

While this will be one of the higher milk prices that any company pays to farmers, the reality is that this price will still fall short of meeting the costs of production that Tesco producers face this coming winter and spring. One independent report has already estimated that the costs of producing milk will increase by 3p per litre over the six-month period in which this price will apply to Tesco suppliers.

"Fresh liquid milk, buoyed by increased sales, needs to re-establish itself as the premium product."
NFU Scotland Milk Committee chairman, Willie Lamont

NFU Scotland Milk Committee chairman, Willie Lamont said:

“For those selling milk to Tesco, any increase will be welcome but this still falls short of what is needed by a dairy farmer to truly cover the costs to produce that milk.

“At a time when milk production is at a forty year low and some companies are bringing in Northern Irish milk to meet contractual obligations, what producers wanted was a clear steer that their milk is wanted and valued. I’m not sure that a 0.75p increase delivers all that.

“The increase does help improve the tone of the market place. Fresh liquid milk, buoyed by increased sales, needs to re-establish itself as the premium product. This will be helped by the recent announcement of Robert Wisemans Dairies that they too are looking to bolster farmgate milk prices. Several other companies have been sitting on their hands waiting for the Tesco announcement and they now need to react in a similarly positive vein.

“The sting in the tail is that those Tesco suppliers who have not agreed to carry out their business accounts with the farm advisory company, Promar, will only receive a 0.25ppl rise. NFU Scotland has voiced its concern at this requirement several times. The vast majority of dairy farmers will have business information compatible with the Promar model but have their farm accounts supplied by another company. To force producers to sign up with one specific company or suffer what is in effect a price cut seems heavy-handed and unnecessary.”

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