Farmers For Action says it has sent a clear message to Tesco and other retailers that dairy farmers will not tolerate supermarkets’ assaults on retail milk prices to win extra business.

But Tesco defended its position, saying that it had done more for dairy farmers than any other retailer.

About 30 protesters gathered at Tesco’s head office earlier this week, led by FFA chairman David Handley. “We had two messages for Tesco. One: Farmers will not subsidise a price war between retailers. Two: We don’t believe in farmers having to sign intrusive contracts where they have to release sensitive and personal information to retailers and others. I think they’ve got that message loud and clear.

Reductions

The protest followed a series of dramatic reductions to retail milk prices by leading supermarkets, which began with Tesco’s move to sell Robert Wiseman Dairies’ Fresh’n’Lo milk at £1.06 for two litres – substantially less than milk from farmers in its direct supply Dairy Development Group.

Eifion Hughes, of the Farmers Union of Wales joined the FFA and others at the demonstration. “Tesco has said it will not drop the price it pays to farmers but this [reduced retail milk prices] could not come at a worse time.

“The general feeling is that we need about 2.5p/litre more on farmgate prices in the next few months. But we’re now in a corner and Tesco has knocked the industry quite flat by starting a price war. Confidence had increased but the industry is now at a low ebb.”

Credit crunch

But Tesco defended its decision to offer consumers cheaper milk as the “credit crunch” continued and economic growth continued to stall. A spokeswoman said: “We introduced Fresh’n’Lo for our customers to help ease the financial pressure some are facing. It doesn’t affect the farmgate price offered through our Dairy Development Group.

“We have committed and will continue to be committed to dairy farmers but we have to recognise the situation our customers are in and we are working to strike a balance. We offer the highest farmgate milk price of any retailer and have supported farmers through our Localchoice milk as well.”

She also defended the terms of Tesco’s direct supply contract. “It’s important for us to get an understanding of our producers and what is affecting them and it’s fair for us to ask for that information.”

Tesco is to hold further, scheduled meetings with the FFA.