Tesco increases price for dairy farmers and lowers price in store for customers

26 Sep 2011

Tesco confirms new milk price of 30.21 pence per litre for farmers

Tesco confirms new milk price of 30.21 pence per litre for farmers

From 1 October, Tesco Sustainable Dairy Group members, who take part in the independent cost tracker review, will receive a new price of up to 30.21 ppl for their milk. This is an increase of 0.43 ppl, since the previous six-month review last April and the highest price ever paid to dairy farmers by Tesco.

Tesco Director of Dairy, Sean McCurley said; “The independent six-month review of farmer production costs by agriculture research consultancy Promar, has shown an increase in the cost of feed, fertiliser and general farm overheads. We have reflected this in the new price we will pay our farmers for their milk, including our allowance of over £50,000 for unpaid family labour.”

Confirmation of the new higher price Tesco is paying its dairy farmers follows the retailer’s Big Price Drop announcement.  Today, Tesco is cutting the retail price of thousands of essential items, including milk, which is now £1.25 for a four-pint carton. Tesco has invested more than £500 million to help customers with the cost of their weekly shopping and reduce the price of products customers need to buy everyday.

Sean McCurley said, “We are delighted to be able to pay our farmers more for their milk, while offering lower prices on the essentials, which will help millions of families.”

Tesco continues to pay its dairy farmers a significantly higher price than the average processor’s price which stands at 28.55ppl as of 1 October 2011.* This means Tesco is paying its farmers 1.66ppl more than the average price paid.

The Tesco Sustainable Dairy Group farmers now also receive an additional amount to cover any costs incurred for the new on-farm code of practice.  This has just been launched across the TSDG to ensure it has leading animal welfare on its farms. The code of practice provides a simple set of measurable targets and absolute standards, which farms supplying Tesco with milk must comply.

Sean McCurley continues, “Thanks to the security and confidence our cost tracker review provides, we have seen many of our dairy farmers able to invest and improve in their businesses. From increasing herd numbers to state of the art milking parlours, to on-farm building improvements and further investment in herd health. Today more and more of our farmers are investing in their future and staying in dairy farming.”

Andy Bloor, Dairy Farmer and Farmer Committee Chairman said, “The TSDG cost-tracker gives us confidence to plan ahead and think of our business in the long term. This new price remains strong in the market and reflects the transparent way Tesco works with the dairy industry.”

Earlier this month Tesco launched a new milk website for customers and its farmers. www.tescomilk.com is hosted on Tesco’s Real Food website with content for customers and a separate section created specifically for Tesco’s dairy farmers and the wider dairy industry.


Background information:

*The average milk price is taken from www.milkprices.com

-- The Tesco Sustainable Dairy Group (TSDG) was established to address the uncertainty facing British dairy farmers caused by the continuing volatility in the markets. The group’s 700  members continue to benefit from Tesco’s pledge to ensure dairy farmers are paid above the cost of production enabling them to invest and plan ahead in their business.

-- The result of the TSDG cost tracker review highlighted an increase in costs primarily driven by higher feed and fertilizer prices.

-- TSDG members who have signed up with Promar will receive a price of 30.21ppl effective from 1 October 2011.

-- Those TSDG members not participating in the Cost Tracker will receive a price of 29.71ppl from 1 October 2011.

-- The commitment of TSDG is further reinforced by Tesco’s work with Liverpool University through its ‘Dairy Centre of Excellence’. This exclusive agreement brings together the dairy sector to look at issues such as animal welfare, lameness, sustainability and consumer trends.

-- We continue to work at reducing the environmental impact of milk production, an increasingly important area and one where we are making good progress. Tesco was the first retailer to label the carbon footprint of a pint of milk, and, in line with the dairy industry’s Milk Roadmap, 10% of our milk pots are made with recycled materials.