Dairy farmers supplying Sainsbury’s are set to receive “real and substantial” premiums for their liquid milk, with help from a multi-million pound investment from the supermarket, chief executive Justin King said today.
Speaking a the NFU conference in Birmingham, Mr King said members of the supermarket’s Dairy Development Group would not receive a higher prices for their milk unless it provided extra customer benefits.
However, he said “multiple millions of pounds” would be available for the anticipated 450 members of their supply group to invest in schemes which would add value to their products.
“We expect to pay more for milk, but we will only pay a premium for what will add value for our consumers,” Mr King told delegates.
“These benefits have to be tangible – we will not prop up inefficient businesses or buck the market.
“Things like environmental issues and animal husbandry are things customers will value and will allow us to pay a premium for. We expect this premium to be real and substantial.”
Mr King said members of Sainsbury’s Dairy Development Group, which is expected to be formed by the end of April, would receive higher premiums as soon as they met the supermarket’s “higher standards”.
Those members who did not meet those standards would receive investment from the supermarket to cover the costs of meeting them, he said.
Mr King said the supermarket was committed to working with farmers, and had built upon its Partnership in Livestock scheme to include lamb, with a similar scheme to include pork in the pipeline.
“There is increased interest in British products, and that is a huge opportunity for British farmers,” he said.
“It is very clear that if we don’t secure long-term, guaranteed and profitable supply chains, then we won’t be able to give our customers what they want.”