THE DECISION by retailer ASDA to make Arla Foods its sole milk supplier will impact negatively on producer returns, claims the Farmers Union of Wales.

“We are worried that previous suppliers like Robert Wiseman and Dairy Crest who lose out may decide the only way to regain the business is to undercut, and this will inevitably put downward pressure on prices,” warned Dei Davies, chairman of the union‘s milk and dairy produce committee.

“The move is yet another indication of the massive buying power of the large multiple chains, which the union has consistently argued ultimately has a negative impact on the returns paid to dairy farmers.”

Mr Davies also believed that it demonstrates that even processors are at the mercy of the four huge multiples.

In contrast, NFU Cymru has welcomed the ASDA-Arla link up, describing it as a positive ambitious step connecting farmers with the marketplace, as encouraged by CAP reform.

It backs the idea of forging new mutually beneficial direct relationships between producer groups, processors and retailers.