Tesco to encourage milk sales

6 April 2000

Tesco to encourage milk sales

TESCO has agreed to do more to encourage more people to drink milk, following a meeting with the Farmers Union of Wales.

But the supermarket giant told the union – which is trying to secure a better price for members – that it could not pay farmers more money.

An FUW spokesman told the Radio 4 Farming Todayprogramme that, although no progress was made on prices, the meeting had been positive.

Past promotions had produced few results, he conceded. But the situation is so grave that unless supermarkets do something they could face seasonal shortages

While Tesco has listened sympathetically to dairy farmers, its lack of action has been criticised by more radical groups such as Farmers For Action (FFA).

FFA wants supermarkets to lean on their dairy companies to get a 22ppl price for farmers, said spokesman Richard Haddock.

FFA advocates an average cost-plus system. It insists this is not price-fixing because retailers will pay whatever they want on top of the cost for quality.

But supermarkets have told FFA they cannot do this as they will be accused of price-rigging by the Department of Trade and Industry.

Mr Haddock said he had to “bang heads together” and get all sectors of the industry, and perhaps Tony Blair, around the table to resolve this confusion.

In the meantime, FFA continued its campaign of direct action by stopping carton milk leaving a Unigate plant at Totnes, Devon, on Wednesday (5 April).

The Office of Fair Trading told Farming Today that, if asked, it would check whether joint price increase would mean retailers were operating a cartel.

But Stephen Bates, an expert in milk pricing at Wye College, said it would be difficult for retailers to increase milk prices.

He said: “Its frankly unrealistic for producers to expect wholesale price increases from the retailers.

“If they did that for milk, other farmers would be demanding other increases in other food products as well.”

Meanwhile, milk prices have dropped another 1ppl. Only the 85 farmers supplying Waitrose escaped the drop as the store swallowed the drop itself.

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