Tesco announces market-leading milk price increase

Tesco has revealed finally the market-leading autumn milk price its suppliers have been clamouring for.
Producers will receive 27.5p/litre backdated to 9 September, a rise of 5.5p/litre.

This means they will be receiving the highest price offered to date by a major milk buyer.

The UK’s largest retailer, which buys its milk through Arla Foods UK and Robert Wiseman Dairies, was not contractually bound to review prices until 1 October.

But it had been coming under increasing public pressure from farmers to announce a hike.

Price rises from other buyers, including the co-ops, meant its existing price of 22p/litre, which was applauded earlier this year, was starting to look less competitive.

Quota broker and commentator Ian Potter said some suppliers had threatened to resign if Tesco did not push its price to over 27p/litre by next week’s Dairy Event.

A Tesco spokeswoman said the early increase should not necessarily be seen as a precedent for the future.

“We are close to the farmers that supply us and we do understand what is going on in the industry,” she said.

“It’s well known that the price of wheat and animal feed has risen sharply. 

“New prices for our dedicated milk producers were due to be implemented on 1 Oct as part of our standard six-month review but we have moved early in recognition of rising costs.

“Where there are genuine cost-price pressures in the supply chain we are always open to discussion with suppliers. 

“At the same time will continue to do all we can to keep prices as low as possible for shoppers.”

Asda and Sainsbury’s will now be under pressure to match Tesco’s move, but neither have confirmed yet what, if any, action they will be taking.

Asda pays farmers 1p/litre over Arla Foods’ standard prices, which is set to rise to 25p/litre in October.