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Continuing to support dairy farmers

Matt Simister

Commercial Director, Fresh Food and Commodities
Welwyn Garden City, UK

2 Sep 2015

In January one of our farmers, James Stephen, wrote about volatility and uncertainty in dairy and how the industry had changed significantly in recent years.  Since then, some of the main drivers of global demand and supply for dairy products have increased the global surplus of milk and farmgate prices have continued to weaken still further.

Tesco price paid to dairy farmers*Updated April 2016: How we’ve been paying dairy farmers more than market average for years

In January one of our farmers, James Stephen, wrote about volatility and uncertainty in dairy and how the industry had changed significantly in recent years. Since then, some of the main drivers of global demand and supply for dairy products have increased the global surplus of milk and farmgate prices have continued to weaken still further.

At Tesco, we have a long history of supporting British dairy farmers and are especially proud of what we have achieved together through our Tesco Sustainable Dairy Group (TSDG). It was the first, and remains the largest of the eight sustainable farming groups that we have initiated to support our farmers and growers. It continues to be a an integral part of how we partner with British Agriculture.

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

Since it was formed eight years ago, we have consistently paid farmers supplying us with fresh milk one of the highest and fairest prices in the industry. The price we pay is fixed for 6 months at a time, recognising true costs of production across different dairy farming systems and allowing the 600 TSDG farmers to plan and re-invest in their businesses, irrespective of the market price.

By using this model to collaboratively partner with our farmers it allows us to support British Agriculture in a fair and transparent way, whilst encouraging sustainable investment into productivity, animal health and welfare.

tsda poster

Our farmers tell us that they appreciate having a dedicated relationship with Tesco focused on the issues that affect their sector, with 96% telling us that they have benefited from being a member of our group. We are pleased that we have led the way across the retail sector, and the wider industry, with the work that we have done to date, having already expanded the programme to include cream, mature and extra mature cheddar. Through the TSDG and our pioneering research and development farm with Liverpool University, the Tesco Dairy Centre of Excellence, Tesco has invested £200m into supporting British dairy farming.

Through the work of the TSDG we understand how difficult the current market conditions are for farmers, and as we head into this very challenging Winter period we have decided to extend its pioneering ways of working to other farmers who supply milk into our Tesco Brand mild and medium cheddar, Red Leicester and Double Gloucester cheese products.

We have examined our product sourcing to further support the British industry. Two-thirds of our Tesco Brand yoghurts are already sourced in Britain, but from March 2016 all of our Tesco Brand yoghurts will be made with British milk, further helping to increase the demand for milk from farms across the UK.

Here's a video we made earlier this year with our former Agriculture Director Tom Hind, explaining how we work with dairy farmers

British farmers deliver some of the highest standards of milk quality in the world and some of the best conditions for animal welfare. It is a naturally healthy and nutrient rich product we can all be very proud of. Across the UK, customers tell us that they want to buy milk products from cows which are looked after properly – and they want the price that’s paid to producers to be fair.

It’s important to acknowledge that there isn’t a single simple solution to resolve the uncertainty faced by many farmers, but a shared challenge for everyone in the supply chain to play their part, towards building a truly sustainable British dairy industry.

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