Sainsbury’s announces milk price increase

Sainsbury’s has increased the price it pays for milk from the 320 farmers in its Dairy Development Group by about 5p/litre.

The rise is in the form of a 1.5p/litre premium that will be paid on top of the standard-litre price of its two suppliers, Robert Wiseman Dairies and Dairy Crest.

The move follows hot on the heels of an immediate increase to 27.5p/litre announced by arch rival Tesco at the weekend.

Following the increase, Dairy Crest farmers supplying the retailer will receive 26.5p/litre from 1 October, while those at Robert Wiseman will get 27.2p/litre.

This is still less than Tesco is paying, but Sainsbury’s, unlike its competitor, is not committed to six-monthly price reviews.

So further increases that could take it ahead of Tesco cannot be ruled out. Of course, if the market falls back, the Sainsbury’s price could also fall more quickly.

Simon Twigger, Sainsbury’s business unit director for dairy, said: “This price increase is the direct result of our discussions with farmers in the Sainsbury’s Dairy Development Group and is what they asked us to do. 

“The premium will be paid to all farmers in the development group and is a reward for their hard work and the commitment they have shown to Sainsbury’s.  Unlike other recent industry price increases, there are no conditions imposed on the farmers to get the premium.”

Ian Sharman, Chairman of supply group Dairy Crest Direct and a member of the Sainsbury’s Dairy Development Steering Group, said: “It is good news that Sainsbury’s is giving real support to farmers at this volatile time. Farmers are to receive further benefits from being part of the SDDG – including the price premium.”

Dairy farmers in the pool supplying Asda, the last of the big-three retailers to announce an autumn price rise, will be waiting keenly to see how it responds.

It buys all its milk from Arla Foods UK and pays 1p/litre over the processor’s standard price.

This is set to rise to 25p/litre in October meaning Asda will be paying 26p/litre.