Tesco cuts milk price by 1.3p/litre
Tesco has confirmed it is cutting its price to dairy producers by 1.32p/litre, reflecting a drop in the cost of production and a fall in the market value of cream.
For a Farmers Weekly comment on this story, see Phil Clarke’s Business Blog |
Letters have been arriving today (Monday, 30 March)) with members of the Tesco Sustainable Development Group – about 850 farmers who supply the supermarket with its own-label drinking milk via Arla Foods and Robert Wiseman Dairies.
As a result, the new Tesco price from 1 April will be set at 27.43p/litre for those farmers who are signed up to Promar’s farm business accounts, and 26.93p/litre for those who are not.
“This price is well above the current market value of farmgate milk and we firmly believe that it reflects our continued commitment to the long-term sustainability of the farmer members of the TSDG,” said a Tesco spokesman.
“The new price is designed to ensure that dairy farmers can continue to run sustainable businesses against a backdrop of continuing volatility in UK, European and global markets for farm gate milk.”
The main part of the price drop is due to a reduction of 1.05p/litre in the Promar “cost tracker”, which provides an estimate for the cost of producing a litre of milk over the next six months. This has been reduced from 27.98p/litre to 26.93p/litre, primarily driven by reductions in the cost of feed, interest charges and fuel.
But Tesco has also decided to remove its “market adjustment”, previously set at 0.27p/litre above the cost tracker. This is mainly a reflection of the fall in the value of cream in recent months – the by-product from producing skimmed and semi-skimmed milk.
A spokesman for Robert Wiseman Dairies said it was welcome news that Tesco was honouring its commitment to milk producers. “Its price compares very favourably with what is available elsewhere.”
- It is understood that cheesemaker Wyke Farms is cutting its milk price by 1.3p/litre from 1 April, taking total cuts this year for its 100-or-so suppliers to 3.5p/litre. Producers are holding an emergency meeting tonight (Monday).
