Supermarkets milk pricing shortsighted – NFU

Supermarkets are adopting shortsighted tactics in cutting milk prices to attract customers, the NFU has claimed.

NFU dairy board chairman Gwyn Jones said that competition between retailers Asda and Tesco was intense.

“Their actions show just how much flexibility there is in the margins they take. However, we know from bitter experience that they don’t often give up any of their margin for long and will come looking to farmers to help redress the balance,” said Mr Jones.

“Artificially lowering prices to consumers through ruthless discounts sends out the wrong message about the real price of food,” said Mr Jones.

“Farmers – just like the rest of the supply chain – need sustainable margins in order to invest in technology and research, which will ultimately lead to better efficiency, more innovation and greater product choice.

With costs remaining high on farm, milk production at a 34-year low and confidence fragile, this price-cutting could force more farmers to go under, he said.

“A lot of work has been done over the past two years to convince shoppers of the need to pay a fair price for milk,” he said.

Mr Jones highlighted the NFU’s Why Dairy Farming Matters campaign and the Womens’ Institute Great Milk Debate as examples of the efforts being made.

“The NFU has been in contact with all the major retailers, including the big discounters, to discuss our Survival Plan. We want to ensure that responsible retail pricing policies become the norm and not the exception.”

But, while Asda was unable to comment, a spokeswoman for Tesco rejected the claim that its tactics were shortsighted. “We pay a good farmgate price for milk. No decisions have yet been made to cut the price to our suppliers.”

The next round of talks will go ahead in the coming days.