17 September 2010 | Helen Gilbert
Farmers will be paid more for the milk they
supply to Tesco, the supermarket giant announced today.
A new price of 28.18p per litre will come into
effect from 1 October – an increase of 1.28p per litre for the next
It will only be paid to suppliers who are
members of the Tesco Sustainable Dairy Group – an arm set up more than three
years ago to ensure dairy farmers are paid above the cost of production.
The new payment follows an independent review of Tesco farmer production costs
by research consultancy Promar, which found a
rise was necessary because of an increase in the cost of cattle feed.
According to Tesco, the new price is
significantly higher than the average price of all other major supermarkets
which is 25.77 per litre.
Lucy Neville-Rolfe, Tesco board
director said: “This new price remains considerably above the current market
value and reflects the transparent way we work with the dairy industry. The
Tesco Sustainable Dairy Group also makes additional provisions for making a
profit, including capital investment and unpaid family labour. This is
essential for the long-term future of the British dairy industry.”
Last week, SM reported how
National Farmers Union president Peter Kendall had called on retailers to “stop finding excuses” and
work with dairy farmers to reach fair price agreements on the supply of milk.
Mansel Raymond, NFU Dairy Board chairman
described today’s announcement as “extremely encouraging”. He said: “Tesco is
benefiting from a committed, sustainable and secure supply of milk and dairy
farmers are receiving greater stability, transparency and a market leading milk
price, which allows them to invest in their businesses with confidence.”