Iceland and Asda’s decision to raise their price of four pints of milk on the shelves signals a “turning point” for the dairy industry, according to Farmers For Action.
The retailers have been accused of using milk as a loss leader to increase footfall in its stores.
But after six months of intense lobbying from dairy groups, including FFA, both have decided to increase the price of four pints from 89p/litre to £1 – equivalent to a 12.4% increase.
After Iceland announced its price rise in late October, Farmers Weekly understands that Asda will follow suit in the next couple of days and announce a price rise in its four pints of milk from 89p to £1.
Tesco has also raised the price of a four-pinter to £1 and FFA chairman David Handley urged other retailers, including Lidl, Aldi, the Co-op, Sainsbury’s, Morrisons and Spar, to do the same immediately.
“I think this is fantastic news for dairy farmers,” said Mr Handley. “At a time when everything is depressed and everyone is feeling that the dairy industry is in the doldrums, this is massive.
“It’s a turning point. On top of these increases, we are seeing cream and butter prices remaining firm.
“There really would be no justification for any milk processor – be it middle ground or top ground – cutting the farmgate milk price again in January.”
Mr Handley said it was too early to say what the increase in milk price on supermarket shelves would mean for the dairy farmer. But he expects more money to start coming back to producers in the next few weeks.
Mr Handley said senior management at Asda had told him they could only increase their milk price if Iceland agreed to raise theirs first.
“This proves what FFA has been saying all along, that the domestic market can deliver more money to dairy farmers,” he added.
“Over the past six months, all we have heard from the NFU and everyone else in the industry is, ‘we are all affected by global markets’.
“Well, here is proof that if you lobby and work hard, there are ways to get the money back.”