Tesco to increase number of British dairy farmers' direct contracts
28 September 2015
Tesco has a long history in supporting British Dairy farming, providing direct contracts to farmers for over eight years through the Tesco Sustainable Dairy Group (TSDG). Set up in 2007, the TSDG model allows Tesco to collaboratively partner with farmers and support British Agriculture in a fair and transparent way, whilst encouraging sustainable investment into productivity, animal health and welfare.
Tesco has a long history in supporting British Dairy farming, providing direct contracts to farmers for over eight years through the Tesco Sustainable Dairy Group (TSDG).
Set up in 2007, the TSDG model allows Tesco to collaboratively partner with farmers and support British Agriculture in a fair and transparent way, whilst encouraging sustainable investment into productivity, animal health and welfare.
Using an independent pricing mechanism, Tesco has consistently paid a market leading price for milk. The price, which is fixed for six months at a time, recognises the true costs of production across different dairy farming systems, allowing the 600 TSDG farmers to plan and re-invest in their businesses, irrespective of the market price.
Matt Simister, Tesco’s Commercial Director of Fresh Food & Commodities said: ‘Over the summer we have been carrying out a collaborative review with members of the TSDG, to help us to continue to partner with our farmers in a sustainable way, adapting to the significant changes we’ve seen across the whole of British Agriculture as well as dairy in recent years.
‘As we near the end of the process, we are confident that we’ll be able to increase the number of direct relationships with our core TSDG pool farms by over a quarter by Spring 2016, helping us to further cement our lead as British Agricultures biggest supporter’.
Following the regular six monthly evaluation of production costs, the new price Tesco will pay for milk from 1st November will be 30.58ppl*.
The new price has been set using the independent consultancy-Promar- to make sure that the price paid by Tesco reflects the average cost of production of the TSDG members. That price is agreed in collaboration with farmers, then set for six months and is completely independent from the retail price for milk. It will cover all Tesco own-brand fresh & filtered milk (1, 2, 4, 6 pint and 1 and 2 litre – excluding organic milk); single, double & extra thick double cream (150, 300, 600 ml) products and mature & extra mature cheddar. Until the 28th February 2016, Tesco brand Mild & Medium Cheddar, Red Leicester & Double Gloucester Cheese will receive 29.58ppl, which will be reflected in the cheese price paid to the processor.
The core principles of the TSDG have always been to:
- Have a transparent and clear pricing mechanism, using an independent cost tracker
- Pay a fair price for our milk and reward those who help us to deliver the best quality milk for our customers and the highest animal health and welfare standards
- Ensure that we have a sustainable approach to the dairy industry.
Notes to editors
- The new price is following an independent cost tracker review by agriculture research consultancy Promar. Tesco pays a price for milk that reflects the cost of production, calculated from costs submitted to Promar.
- The previous price was 30.93ppl* The new price takes into consideration a reduction in the cost of feed and rising milk volumes
- The TSDG review is due to be completed in November 2015
- Earlier this month Tesco announced that from March 2016, all Tesco Brand Standard tier yoghurt will be made with milk sourced from Britain
*The price includes 0.5ppl for sharing cost data with Promar International
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