Tesco admits milk price error

RETAIL GIANT Tesco has come under pressure to make public its profit margins on milk after the company admitted that it stated a wrong figure in a letter to campaigning consumers.

The letter was sent out three weeks ago (Oct 22) to consumers who had taken part in lobby group Farm‘s Just Milk campaign.

In it, Tesco claimed: “The dairy companies sell us milk for about 3p less than the price we sell it at.” 

But the letter did not specify whether the 3p was per litre or pint, the volumes usually referred to in the milk industry, and on Wednesday (Nov 10) a spokesman said that the figure was wrong anyway.

He also made it clear, however, that the company had no intention to publicise the real gross margin on its milk sales.

But both Farm and Farmers for Action have now called on Tesco to publish its figures.
Farm coordinator Robert Alderson said it was all terribly misleading.

“As far as we are aware, this was a letter sent out to all the people who sent postcards to Tesco demanding a just milk price for farmers.”

“The letter does not say whether the margin figure quoted relates to pints or litres, but even if it had been per pint, it would still have been significantly lower than industry statistics suggest,” said Mr Alderson.

According to the Milk Development Council‘s statistics for 2003, the average margin on milk for retailers was 12.92p per litre.

Mr Alderson said Tesco should come clean about its profits, adding that it would be in the company‘s own interest to do so since an increasing number of consumers were concerned about the issue of fairness in the dairy supply chain.

“Tesco has to respond now to its consumers and make its figures public. But the company also has to make clear whether it is going to take a lead in ensuring that dairy farmers are going to receive a fair price for the milk they produce,” Mr Alderson said. 

He added: “As Farm‘s campaign has shown, consumers are worried about the situation for dairy farmers and the wider repercussions from a dying dairy industry.”

Farmers for Action joined in the call for transparency from Tesco.

“For several years now I have called upon the retailers to make their figures public, and the easiest thing to do for Tesco now is to send a cost price invoice to FW so that we can all see what the company has paid for its milk,” said FFA chairman David Handley.