10 April 2007 | Paul Snell
The National Farmers' Union (NFU) has urged retailers to increase the prices supermarkets pay dairy farmers.
It follows an announcement by supermarket Tesco last week that it will offer direct contracts to selected milk suppliers, guaranteeing them a price of 22p per litre. The 12-month contracts will initially be offered to around 850 farmers in the UK.
Peter Kendall, president of the NFU, described the announcement as significant and encouraging. "It is a ground-breaking announcement that should set a massive precedent for other retailers to step up to the plate," he said.
Tesco said it would review the contracts every six months to ensure they reflect production costs, such as energy, labour and feed.
Richard Brasher, Tesco commercial and trading director, said: "We know that some British milk producers have had a very difficult time for a number of years. We have recognised our responsibilities and have been working to get closer to key stakeholders in the dairy supply chain for some time."
The NFU praised the "meaningful partnership" these contracts would create with farmers. But Kendall warned: "This is not a panacea for the whole industry. Not all milk produced on farms is sold in bottles through the supermarket."