Tesco Milk Price Announcement

UK - DairyCo is waiting for confirmation that the Promar/Tesco cost of production formula has resulted in a 0.43 pence per litre (ppl) price increase to be paid to its Sustainable Dairy Group for the six months from 1 October.
calendar icon 26 September 2011
clock icon 1 minute read

The cost of production formula takes into account changes in production costs as well as a market balancing element.

As the cost tracker is based on a projected budget for the current financial year rather than historical farm production costs it is believed that more recent increases in production costs were already accounted for in the 1 April price increase of 1.28ppl.

In comparison, Marks and Spencer awarded 2.307p per litre to its 42 dedicated milk suppliers from 1 August based on the Milk Pledge plus pricing formula, which takes account of the farmers' costs of production as well as reflecting movement in the retail price of milk sold through Marks and Spencer stores.

Also Dairy Crest has confirmed that it will continue to pay an additional payment to farmers on the stable priced milk&more contract.

The one ppl discretionary bonus payment is separate to the milk&more pricing mechanism within the contract.

It was introduced for the six months to 30 September 2011 to enable Dairy Crest to support this group of farmers during a period of severe farm cost inflation. With costs continuing to create a challenging environment, Dairy Crest have now agreed to extend the payment period of this bonus up until the end of the current milk&more contract in February 2012.

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