Morrisons has agreed a new three-year contract starting in March 2018 that will mean all its own-brand liquid milk is provided by Arla Foods.
In a statement, Morrisons said it was “looking forward to working more closely with their farmers on a range of sustainability and animal welfare measures”.
As part of this deal, Morrisons said it would be committing to further enhance its regional and local milk offering.
Steve Newbould, Morrisons head of trading – dairy, said: “We believe this agreement will be simpler for our business and will help to develop a sustainable dairy sector.”
An Arla spokesman said: “This is very welcome news and we are delighted by Morrisons’ continued support for Arla and our farmer owners.
“We look forward to an exciting long-term relationship with Morrisons collaborating further on a number of initiatives that will further champion British dairy.”
Arthur Fearnall, Arla farmer owner and chair of the Arla/Morrisons Farmer Group, added: “I believe that our farmer-owned principles played a crucial role in the outcome of this decision.
“I’m looking forward to representing our owners in what I believe will be a significant partnership going forward.”
Currently, both Arla and Muller Wiseman Dairies supply Morrisons with its own brand milk. Arla supplies “the majority” of Morrisons’ own brand milk.
Muller loses contract
However, the announcement means Muller Wiseman will lose its contract to supply own brand milk to Morrisons.
A spokesman for Muller Wiseman said: “Morrisons remains an important and valued customer for whom we continue to provide a range of Muller branded and private label dairy products including Frijj flavoured milk and our range of yogurts and chilled desserts, to support their dairy category offering to consumers.”
A spokesman for Morrisons said he could not release details of the volume or value of the deal with Arla “because of commercial sensitivities”.