Aldi and Morrisons have made new commitments to pay processors 28p/litre and 26p/litre respectively for milk before processing costs.
The Morrisons move came late on Friday (14 August) and followed the retailer’s announcement earlier this week to offer customers the option of paying 10p/litre more for a milk brand where that extra 10p/litre would go back to the farm.
“We are going to increase our offer to our processors for the liquid milk element of our processed fresh milk to a minimum price of 26p/litre from later this month and through the winter,” said Morrisons.
The company also said it had asked supplier Arla to pass the minimum milk price on to farmers and that it would continue discussions with its cheese processor about other initiatives to help milk producers.
In a joint statement the NFU, TFA and Farmers For Action said: “After our conversations today we are pleased that Morrisons has recognised the need to support the dairy sector at this difficult time.
“Morrisons must continue conversations with its processors on a regular basis. And it is absolutely vital that the extra money goes back to British farmers – we cannot emphasise this enough.
“Further work is needed within the cheese sector and we will continue discussions with Morrisons on this issue.
“Our main concern at present is that any relief within the cheese sector is being funded by price increases to customers.
“We believe there is sufficient margin within cheese sales which should avoid customers having to pay more.”
Earlier in the day Aldi announced that from next Monday, 17 August, it would pay 28p/litre to processors for all liquid milk sold in its 574 UK stores and expected this to be passed back to the farmgate.
The move follows what the retailer said were proactive and positive discussions with the National Farmers Union and said that it would ensure that farmers receive a guaranteed floor price for the milk supplied to the three processors that supply Aldi.
A spokesman for Aldi said that the 28p/litre would go into the milk pool and a payment would be made in addition for processing and bottling.
“We can’t expect Morrisons or Aldi to sort the whole dairy industry out but we can expect them to pay a fair price. This will stop it reducing further and puts the floor at a sensible level”
Rob Harrison, NFU
As with other deals announced this week by retailers, calculating the actual benefit to farmers is fraught with difficulty as the milk attracting the 28p/litre and 26p/litre payments will come from larger pools where milk was supplied to other customers.
NFU national dairy chairman Rob Harrison said that the Aldi move would not solve all the problems of the industry but at least they were putting more money into the supply chain for the milk they bought.
“This rise must be reflected in the price paid to the farmers on the ground,” he said.
“We welcome this commitment from Aldi as part of the company’s wider support for British farming.
“Aldi has shown that it supports the farming community and has developed sustainable agreements with its liquid milk suppliers, in addition to its existing strong commitments to the farmers of Britain in fresh meat and produce.
“We will continue conversations with Aldi as to its position on cheese and other dairy products.”
“We can’t expect Morrisons or Aldi to sort the whole dairy industry out but we can expect them to pay a fair price. This will stop it reducing further and puts the floor at a sensible level.”
Morrisons said it would also introduce a cheddar cheese priced at a retail premium of 34p/pack above the retailer’s standard cheddar price to deliver the equivalent of 10p/litre back to farmers who supplied the milk.